Apr 26, 2013

Flight Plan: Armavia approaches Public Council with a “rehab” offer

Experts of Armavia air company, Armenia's national carrier that declared bankruptcy on April 1, has submitted to the Public Council a “rehabilitation” plan to overcome the stagnation in the sphere of civil aviation in the country.

The rehab plan suggests that the 10,000 drams ($25) air tax be taken out of the ticket price, independence be granted to air companies in acquisition of aviation gasoline, and Armavia’s debts to the state budget be rearranged.

Public Council (PC) chairman Vazgen Manukyan believes the package of suggestions can also help to rehabilitate Armavia. He says it is possible to have several national carriers, one of which could be Armavia, but on a smaller scale.

Countering to Manukyan, PC member Vazgen Safarayn, chairing the Union of Domestic Manufacturers of Armenia, says for a few times already both state and private structures have made concessions to help Armavia, however the company’s fiscal policy is unclear up until now.

Another PC member Karine Danielyan, leading the Association for Sustainable Human Development, says Armenian Airways – the previous “national carrier” -- should not have been sold and privatized. She believes by doing so Armenia has lost small aviation, and is now losing big aviation. Danielyan says in terms of national security the state approach to this issue has to be as strict as possible, otherwise the crisis might lead to outflow of skilled pilots from Armenia parallel with the aggravation of the situation.

Armavia had sold tickets for flights months ahead till October 26 and has been returning tickets to those passengers since early April. Around 300 tickets have been refunded, the reimbursement process is ongoing.

This is the second national carrier to go bankrupt in Armenia, the first was Armenian Airways. Armavia owner Mika Limited company, belonging to Michael Baghdasarov, is registered in Jersey Island, recognized as an offshore zone by a government decree of the Republic of Armenia.

Armavia owes the state budget 24.2 billion drams (around $58 million). Its total debt to the local banks makes $35 million, bringing the company’s overall debt to around $93 million. PC’s Manukyan stresses that Armavia has a plan on how to pay back its bank debts, while the debt to the state budget is suggested to be exchanged for company stock.

Source: armenianow.com

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