Page 119 - RusRPTNov19

screens, even though the near-term triggers are still quite muted and increased its 12-month Target Price 13% to RUB 450 and upgrading the stock from Hold to Buy on an ETR of 52%.
9.2.3 Aviation corporate news
The Russian government may cut its share in national airline Aeroflot to half in the next two years , as the next step of a plan to restart the stalled privatisation programme and eventually reduce the state’s holding in the national carrier to a quarter. Russia’s Ministry of Economic Development may offer a 1.17% minority stake in national air carrier Aeroflot to private investors by 2022, Kommersant daily reported on October 18. Reportedly, the initiative could be supported by the Finance Ministry, but is likely to be opposed by the Ministry of Transportation. Selling a 1.17% stake would cut state ownership to 50%. The state controls 51.17% in the carrier, 35.7% is held by institutional investors, 3.5% by state technology agency Rostech, 5.1% by private investors, 4.3% is a treasury stake, and 0.1% is held by the management of Aeroflot. Previously in the botched privatisation efforts of 2014-2016, the state already planned to cut the participation in Aeroflot to 25% plus one share.
Russian national air carrier A eroflot could lease 23 new generation Airbus 320/321 jets for 12 years as of 2012 , in a contract that could be worth as much as $2.6bn, Interfax reported on October 7 citing an entry in the state procurement portal. If the deal goes ahead it would be the largest order of new-generation jets by Aeroflot ever. Both Airbus 320/321 neo and Boeing 737 Max are new-generation medium-range jets that save up to 15% more fuel. Previously Aeroflot was not ordering foreign medium-range jets as it has booked domestic MS-21 jets. However, this year the government commission on import substitution has allowed Aeroflot to order 75 neo and Max jets, as the production schedule for MS-21 has been pushed to 2027. Last month Russian United Aircraft Corporation (OAK or UAC) said it would sell the MS-21 Russian medium-range jet 20% cheaper than the competing Boeing 737 and Airbus A320 . Currently OAK has orders for 175 jets on its books, out of which 50 are from the Russian national air carrier Aeroflot, 10 from Kazakh Bek Air, and 5 from the Yakutia airline. Another 35 jets are expected to be ordered by Aeroflot by 2020. OAK estimates that the demand for MS-21 type of jets will be 1,000 in Russia and 30,000 globally by 2038. Earlier this year the Audit Chamber revealed that the cost of MS-21 had skyrocketed from RUB125bn in 2008 to RUB438bn in 2019. Irkut Corporation, one of the subsidiaries that make up OAK, together with Sukhoi Civil Aircraft, has accumulated a deficit of RUB197bn.
Russia’s lowcost Pobeda airline, a subsidiary of Russian national air carrier Aeroflot , is the fastest growing airline in Europe and wants to boost prices for flights to Russia, Vedomosti daily reported. Pobeda, based at Moscow’s Vnukovo airport, will increase its capacity by more than a third (34.3%) this winter, putting it streets ahead of any other airline serving the continent, the Daily Telegraph reported on October 16. The second largest growth (23.5 per cent) has been registered by Wizz Air, the low-cost Hungarian airline that connects British airports with a number of destinations, both popular and offbeat, in Eastern Europe.
Russian budget airline Pobeda will have to adhere to a Russian court's ruling that it cannot charge for the offline check-in of passengers on
119 RUSSIA Country Report November 2019 www.intellinews.o