The Transaero Mess

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Russian airline, Transaero, deep in financial difficulties, was supposed to be taken over by Aeroflot.  Turns out Aeroflot won’t be doing that because the company cannot get the 75%+1 share of Transaero it had expected.  The takeover has fallen through.

Transportation Minister Maxim Sokolov told reporters yesterday that the government will not allow the airline to even sell tickets.  With its debts unable to be paid, and no state bailout, Transaero looks doomed.  Yesterday a report in Russia said the state moved on a bankruptcy.  The share price is down to 20 rubles (about $0.31).  Could there be some shareholders holding out for something?

It would appear a power play is in the works. Aeroflot has no need to rush to rescue Transaero.  Once the state withdrew a parachute, Transaero debt and shareholders were left hanging.  Whereas they might have been given a severe haircut before, now it looks far worse.  Lessors can repossess the aircraft, and may have to eat unpaid leases.

No matter how this plays out, Aeroflot wins.  It helps that the state owns 51% of Aeroflot.  Aeroflot will pick up the traffic and also cherry pick employees and other assets.  Transaero has 104 aircraft (only nine are directly owned) and Aeroflot will be able to select from this what it could use. (Our correspondent Fabio Giganti reports that Russian Minister of Labour Maksim Topilin said about 5,000 Transaero employees out of 11,500 will be transferred to Aeroflot.)

However, big hits are coming to Airbus and Boeing.  Transaero has four A380s on order, eight unconfirmed A330-200, 12 A330-900neo and eight A320neo on the books.  Transaero also has four 747-8s on order, at least one of which is built and now being stored.

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