Wednesday, 17 June 2020

Massive Russian government backed rescue deal for Aeroflot on the way?

A major rescue package for the biggest Russian airline group, Aeroflot is underway according to local press and news agency Reuters.

The plan appears to be one involving the government and VTB state bank  in which the two would buy new shares in the struggling airline group, which like most airlines the whole world over has been hit by the global Coronavirus pandemic.

According to sources, the Russian Direct Investment Fund may very well also be taking an direct interest in the share purchase as the total value of new shares to be offered is expected to be nearly $1.16 billion.

Reuters is reporting that the government will buy about 50 billion roubles worth of shares, whilst  the Russian Direct Investment Fund and VTB would purchase around 15 billion roubles worth each.

So far there has been no official word on the rescue deal,  with both VTB and the Russian Direct Investment Fund refusing to comment and Aeroflot advising it had no information on such a deal taking place.

“We don’t have such information,” Aeroflot said in emailed reply to a Reuters request for comment. A government spokesman and VTB did not reply to requests for comment.

Whilst nothing is confirmed that this stage,  it is highly likely that the Russian government would instigate such a bailout of the carrier, which is seen as one of modern Russia;s success stories and perhaps one of, if not the best known Russian brands globally.  The government has a long history of either investing in or other wise helping Aeroflot to remain flying, increase profits and serve thin regional routes. 

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