May 10, 2013

Creditor banks agree to write off penalties and fines of Armavia

The creditor banks had agreed to write off the penalties and fines of Armenia’s national air carrier, Armavia company, Transport Communications officer Isabella Muradyan said in an interview with ARKA news agency.

Muradyan is a deputy chief of Armenia’s Public Council of Air and Transport Communications. 
Armavia company has stopped operating flights on 1 April and declared bankruptcy. 

“We are aware that the banks agreed, and penalties were written off. It refers to the debt amount only, which is covered by the air company’s pledged property,” she clarified. 

According to Russian  “Kommersant” daily newspaper, Armavia’s debt to some Russian banks, airports and Rosaviation stands at nearly $25 million. Besides the Russian banks, the company owes money to several large Armenian banks. Particularly, Armavia owes several million rubles  to Vnesheconomban, and $22 million –to VTB. 

Chairman of VTB Bank (Armenia) Yuri Gusev earlier said the bank together with its stockholder, Armenia’s Central Bank and Armavia’s owner are seeking for the maximally painless solution to the debt issues. 

According to Muradyan, Armenia’s government should follow the creditors in the write-off, because the company’s debt to the government is not big, and the penalties and fines exceed the debt amount three times. 

 “I think, in the current situation, when the government can’t provide a direct financial assistance to the company, it should at least write off the penalties,” she noted. 

Muradyan highlighted in order to solve the issues,  it is necessary to create an institute of a national air carrier where the government will hold block of shares of the company. 

“Armavia has submitted a list of proposals to the Public Council on how the company can re-launch its operation, and I think, it is the best solution, and it is important to follow the path of re-organizing both: the sphere and the carrier,” she resumed.  

In the list of proposals, Armavia mainly insists on rebuilding the parity at the market. The company also requires to remove 10,000 drams (the so-called “tax on air”) from the ticket cost. Armavia also proposes to the government to gain a part of shares of the company thus restructuring the debt to the state budget. 

Some other conditions are to define the clear criteria of  “basic airport” and “national air carrier” terms, and to introduce a 30% discount on airport fees compared to the foreign companies. 

The analogical discount is proposed for leased areas for basic air carriers.

In addition, in order to avoid the collapse of the national air deliveries, it is proposed that one and more air carriers should operate, and air companies should buy air fuel themselves and pay affordable fees for airport services.


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