UPDATE – The Ukrainian government has announced the establishment of a new national airline, tentatively called Ukraine National Airlines (UNA). The new airline should help establish Ukraine as a key market for tourism and as a hub for international air travel. It’s not clear from the announcement how UNA relates to existing – privately owned – Ukraine International Airlines (UIA). Ukraine wants Airbus fleet for new national airline.

President Volodymyr Zelenskyy announced the new airline on November 25 during a forum called ‘Large Construction: Aviation and Tourism’ at Kyiv airport. “This is our national air carrier, its establishment will be officially launched today. We are ready to invest in the air fleet, load Ukrainian manufacturers, and involve world leaders in joint projects in aircraft construction,” Volodymyr Zelenskyy said. The government wants the new national airline to become less dependent on privately owned carriers, notably Ukraine International Airlines (UIA).

Prime Minister Denys Shmyhal added: “Ukraine has a unique geographical location at the crossroads between the continents. Today, it helps us become a major regional aviation and tourism hub. Experts, leaders of the world’s largest tourism and airline companies are convinced that Ukraine’s potential in these industries is a 10-fold increase in the near future.” The government is assisted by the French consultancy agency Aerogestion which is specialized in the airline and tourism industries. It has advised airlines like Air Seychelles, Air Austral, Air Caraibes, and Air Tahiti Nui.

MoU with Airbus for up to 22 aircraft

Ukraine wants an all-Airbus fleet for the new airline. Press agency Interfax-Ukraine reports that the Minister of Infrastructure Olkesandr Kubrakov has signed an MoU with Airbus for the purchase or lease of up to 22 aircraft for UNA. These include six A220s, twelve A320neo-family aircraft, and four long-haul airliners, A330neo’s or A350s. The plan is that UNA operates some 15.000 flights by 2026 and should reach profitability that year. The MoU would also include the possibility that the Ukrainian aerospace industry will cooperate with Airbus.

President Zelenskyy announced the new airline during a forum at Kyiv Airport. (Government of Ukraine)

Role of Ukraine International not clear

As stated, the relationship between the new airline and Ukraine International Airlines isn’t clear, but UNA is set to become a direct competitor to the privately owned airline. UIA was founded in 1992 by the state and lessor GPA. It later transformed into a public-private entity and has had Swissair, Austrian Airlines, and the European Bank for Reconstruction and Development as shareholders for some years. The airline has known difficult years as its ownership changed in 2010 and international investors left. Since then, the airline is owned by Cyprus-bases Ontobet Promotions Ltd and Ukraine-based Capital Investment Project, which are related under an obscure umbrella of companies. The carrier suffered from a deep economic crisis in 2014. AirInsight spoke to then-CEO Yuri Minoshnikov in 2015. He was ousted in 2019 but has stayed on as Board member. 

Between 2014 and 2019, according to its website, UIA lost $216 million thanks to ‘unequal business conditions’ including high expenses for crossing Russian airspace, In 2020, one of its Boeing 737s was shot down departing Tehran, and later the airline briefly stopped all operations as a result of the Covid-crisis. During the first nine months of 2021, UIA reported a net profit of UAH 1.08 billion and an EBITDA of AUH 2.7 billion thanks to a strong third quarter.

UIA currently operates a fleet of 27 aircraft, including five Embraer E190s and two E195s, thirteen Boeing 737-800s and four -900ERs, two 767-300s plus a single 777-200ER since 2018. Most aircraft are leased and between 10.8 and 29.3 years old.

Ukraine International operates a single Boeing 777-200ER (UIA)

The government will invest heavily in aviation 

During the forum meeting, Shmyhal said that the government sees three opportunities to develop tourism and the aviation sector. The first is the recently implemented agreement between Ukraine and the European Union, which allows visa-free travel and should open up the market to the benefit of Ukrainian citizens. However, this is will also introduce stiff competition from EU carriers, with both Wizz Air and Ryanair have expressed their intentions to make Ukraine their next growth market.

The government will also invest in new aviation infrastructure, including airports. This year, UAH 3.4 billion has been invested in airports like Vynnitsia, Odesa, Kherson, and Boryspil. A third area that the government will invest in is in the aviation industry, notably Antonov. Until 2030, it earmarked UAH 34 billion to develop aircraft construction.

Ukraine expects that the agreement with the EU will help Antonov get recognition of its type certificates in the West and help reach the target of aircraft sales of UAH 300 billion by 2030. Other Ukrainian aerospace companies should also benefit from the investment plan and tax benefits. Antonov has known some very difficult years. It offers the An-132 and An-178 as cargo planes, as well as the An-148 and An-158 as regional passenger airliners.

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