Under heavy pressure from Western sanctions and airspace bans, Russian state flagship airline Aeroflot (AFLT.MM) plans to raise up to 185.2 billion roubles ($3 billion) in an emergency share issue, it said on Tuesday.
Shareholders approved to issue 5.42 billion new shares that can be purchased at a price of 34.29 roubles each under an open subscription. The airline has approached United Aircraft Corporation about ordering 300 planes. Aeroflot wants the Sukhoi Superjet 100, Russia’s main domestic-made passenger jet, which typically seats just under 100 passengers. The TupolevTu-214, which seats roughly 200 passengers, will receive a smaller number of orders, according to the company.
The European Union, United States, Britain and Canada have shut their airspace to Russian planes. Thereby, cutting Aeroflot off from lucrative flights to Western markets. In response, Aeroflot opted to not pay dividends on its 2021 earnings. And has not published first-quarter results for this year, shielding itself from having to reveal the financial toll of sanctions.
RAINY-DAY FUND
Russia’s National Wealth Fund is a portion of the $3 billion infusion (NWF). With the government promising to invest 107 billion roubles ($1.74 billion) in Aeroflot. During the pandemic, Moscow stepped in to buy 80 billion roubles ($1.3 billion) of Aeroflot shares using the NWF. In its statement, Aeroflot did not provide details how much of the new share issue the state may buy. The finance ministry declined to comment.
The airline carried 2.2 million passengers in March 2022, including on its low cost airline, Pobeda – Russian for “victory”. That was down from 2.8 million in February, and less than half the 4.6 million carried in March 2019.
-Reuter.