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NRB Pins Ilyushin Hopes on Aeroflot Stake

Published: March 18, 2003 (Issue # 852)



  • The Voronezh aviation plant relaunched production of the Ilyushin Il-96-300 last Saturday for the first time since 1999.
    Photo: Lyuba Pronina / The St. Petersburg Times

VORONEZH, Central Russia - Many see little hope the stagnant aviation industry will ever get off the ground, but at least one bank is betting big on it.

In a move it hopes will help pull the industry out of its post-Soviet tailspin, National Reserve Bank is negotiating to buy Millhouse Capital's blocking 26 percent stake in flagship carrier Aeroflot.

"We hope to close the deal soon," NRB Deputy Chairperson Sergei Shakin said Saturday at the Voronezh aviation plant, where industry officials gathered to tout the resumption of production of the Ilyushin-96-300, the country's premium long-haul aircraft and a lower-budget version of the Boeing 767.

Millhouse manages the stake on behalf of Chukotka Governor Roman Abramovich and other shareholders of Sibneft who paid an estimated $120 million for it two years ago, but has been unable to make much use of it.

Shakin declined to provide details of the deal, but he made no secret that he hopes the stake will give NRB enough board clout to influence key decisions of the state-controlled carrier.

Specifically, NRB wants Aeroflot to buy more Ilyushin-96-300s.

The bank, together with Ilyushin, set up the Ilyushin Finance Company, or IFC, in 1999 and, two years ago, was one of two companies to win a government tender designed to help devastated domestic manufacturers by offering customers state-backed leasing options.

The other company chosen in the tender was Financial Leasing Co., which is mainly owned by the Tartarstan government and works with the Kazan aviation plant, which manufactures mid-range Tupolev Tu-214s.

Under the terms of the tender, each company was to sell a controlling stake in itself to the government for at least 1.5 billion rubles ($47 million), but it took more than a year for the money and equity to change hands, and IFC has yet to sell a single jet.

Now, however, NRB is hoping Aeroflot will make good on a letter of intent it signed in 1999 for six Il-96-300s, which would double the airline's fleet of the craft.

IFC was originally expected to deliver the planes in 2001, but the deal stalled.

On Friday, a group of Aeroflot managers sat down with IFC to discuss how the company wants its planes to be fitted before it will agree to buy them and the two sides seemed closer than ever to a deal.

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