Armavia Ailing or Aspiring?

 

Few will have heard of Amravia but this week they sounded like they were about to join the list if bankrupt airlines for 2012. Armavia is the national airline of Armenia, a small landlocked  mountainous country in the South Caucasus region of Eurasia. It  was part of the USSR.

Armavia was established in 1996, with commercial flights to Russia and Turkey starting in 2001. It had a strategic alliance with Russian  S7 Airlines who owned 68% of Armavia for a while. The carrier took over flights from Armenian airlines which went bankrupt in 2003 and then it absorbed flights operated by Armenian International Airways  which collapsed in 2005.

It has a smallish fleet of eleven planes and was launch customer for the Sukhoi Superjet 100 last year. They named it after the first cosmonaut, Yuri Gagarin. (Ironically, one of the largest orders for the Superjets  was from the now defunct Malev Hungarian Airlines). Their second Superjet 100 comes in April, 2012.

They fly to points in Europe (eg Amsterdam, Lyon, Milan, Venice), Middle East (eg Tel Aviv, Beirut, Dubai, Istanbul), Russia (Mosow, Volgograd) and Ukraine (Kiev, Odessa). Most flights orginate from Zvartnots Airport 12 km (7.5 mi) west of the Armenian capital:  Yerevan.

For much of 2011, they have been clearly in a cash flow crisis. They dismissed staff very quickly after the European summer of 2011. In addition, there have been rumors that the airline is up for sale.  Armavia flights have been delayed because of the company’s high debts to Zvartnots Airport which twice surpasses the norm set. In December they reduced all fares by 7 per cent- one wonders if to generate cash. The Federal Russian Air Transport Agency (Rosaviatsia) suspended flights in Russian airspace until air navigation fees were settled.  On March 6, Armavia promised this payment by March 20.

On the same day, the airline went on “strike”, refusing to pay fees on flights out of Zvartnots Airport in protest of the high fees at that airport. The Managing Director of Armavia,  Mikhail Baghdasarov said “either we declare bankruptcy or Zvartnots Airport lowers its tariffs by 25 percent“. There was an agreement on March 14, 2012 between the airport and the airline which has been kept confidential.  The company said is preparing for a “busy summer” and intends to acquire new types of aircraft.

So is Armavia ailing or aspiring?

 

 

Pingbacks

  1. […] Friday has become my day to blog about major changes to airlines. So far, this year, there has been a lot to write about vis a vis airline bankruptcies (Cirrus, Spanair, US3000,  Air Australia, Malev, Air Zimbabwe, Direct Air, Red Jet, GMG) or near bankruptcies ( Armavia, Kingfisher,  Pinnacle). […]

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