Page 130 - bneIntelliNews monthly country report Russia May 2024

Volkswagen and Hyundai and is one of the biggest winners of the mass departure of foreign firms from the Russian market.
Alexander Varshavsky and his business partner Kamo Avagumyan came top in our ranking of the “New Russians” — those getting rich buying up the assets of firms quitting the country. Volkswagen and Hyundai used to account for one in every three cars sold in Russia before the war. The companies had combined annual revenues of 617bn rubles ($6.6bn) in 2021.
the Avilon dealership, founded by Varshavsky, traded on his connections with the Moscow elite to build fancy showrooms and a 21-storey business center in the capital, as well as win a stream of lucrative state contracts to supply Western-made cars to Russia’s security services.
As his Russian business empire grew, Varshavsky, a naturalised American citisen, was arrested while traveling to the US in 2014 — a turning point at which he went all-in on his Russian connections, a former business partner told The Bell. He “realised that he was not welcome in the US,” they said. At this point, and with the geopolitical standoff between Moscow and the West escalating, Varshavsky started to look for opportunities to cash in on the tense political atmosphere and turn the world of sanctions to his advantage.
In 2023, an Avilon-linked business closed a deal for VW’s former Russian assets for 125mn euros — a more than 90% discount on their pre-invasion valuation — and later secured a deal for a symbolic 10,000 rubles ($110) to buy Hyundai’s production facilities.
However, buying the assets proved to be the easy part. Both companies had relied on foreign supply chains and extensive partnerships with their parent companies. With those now destroyed it is unclear how Varshavsky intends to restart production.
9.2.3 Aviation corporate news
Russian national air carrier Aeroflot Group increased its passenger traffic by 22% year on year to 11.5mn passengers, in 1Q24. Out of that, domestic flights carried 8.64mn passengers (+14.9% y/y), while international routes carried 2.88mn passengers (+47.9% y/y).
Passenger turnover increased by 31% y/y to 32bn passenger-km, indicating an increase in the length of the average routes, Renaissance Capital commented. On domestic routes, passenger turnover totalled 18.7bn pkm (+16.5% y/y) and on international routes 13.3bn pkm (+58.5% y/y).
Seat occupancy for 3M24 increased by 2.1 percentage points to 88%: on domestic flights by 2.2pp y/y to 90.4% and on international flights by 2.7pp y/y
130 RUSSIA Country Report May 2024 www.intellinews.com