08 February 2010, 17:50 Business

"VIM-Avia" should not and flies

One of the largest charter carriers - VIM-Avia - will not go bankrupt

Andrey Kovalevsky One of the largest charter carriers, VIM-Avia, will not go bankrupt. The company managed to resolve the debt issue. But to stay in business, it will sacrifice market share and focus on revenue lines and rely on scheduled flights.

The Moscow Arbitration Court on Monday terminated the bankruptcy proceedings of VIM-Avia, one of the leading Russian charter air carriers operating flights to Egypt, Italy, Greece, Morocco and Spain. This decision was made in connection with the applicant’s refusal to declare the airline bankrupt, since it had repaid a debt in the amount of 2 million rubles, the applicant for which was the Volga-Kama Shipping Company.

In fact, VIM-Avia owes 2 million rubles to the Tulpar company, which specializes in business transportation. But the creditor, who filed five claims against VIM-Avia in the amount of 56.5 million rubles in 2009 alone, resold his debt to the Volzhsko-Kama Shipping Company. Tulpar does not comment on the reason for the resale. But, as VIM-Avia notes, this came as a big surprise for the airline. “This happened at a time when most of the debt to Tulpar was repaid and further agreements to repay the debt were agreed upon,” says a recent official letter from the airline, signed by the carrier’s CEO Alexander Kochnev .

VIM-Avia entered the aviation market in 2004. The owner of the company was businessman Rashid Mursekaev , who made money by supplying Chinese consumer goods to Russia. At the same time, he bought 12 used Boeings for VIM-Avia. The airline immediately began to specialize in charters, where there was a clear shortage of carrying capacity. At first, things were going well for the carrier: in the charter segment it even overtook Transaero. But then, due to high demand and periodic technical problems, serious schedule disruptions began to occur.

The airline made it to the top of the list of the most unpunctual carriers. Even before the crisis, it began to show negative financial and production results.

At the end of 2008, the drop in VIM-Avia passenger traffic was 36%. VIM-Avia has debts. Creditors began bombarding her with lawsuits. Since 2008, there have been more than 80 of them in Moscow arbitration alone. And just six months ago, VIM-Avia was among those ten carriers whose financial condition caused particular concern to the Federal Air Transport Agency . These carriers could lose their air operator certificate at any time.

However, all these debts, VIM-Avia reports, have been settled. The Tulpar debt was the last known. According to the company's management, all charter programs are now operating as normal and there is no reason to worry about summer plans.

Experts agree with this. “There was little doubt that the dispute would be resolved and that the carrier would not go bankrupt,” says Oleg Panteleev, head of the analytical department at Aviaport .

To stay afloat, VIM-Avia had to reconsider its approach to transportation.

Since the fall of last year, the company began to transfer traditional charter flights to a regular basis. At the same time, it closed almost all previous regular transportation within Russia at the end of 2009, “because their profitability was absolutely unacceptable for the company.”

Of the previous regular flights, VIM-Avia retains only its oldest international destinations - Thessaloniki and Barcelona. “In general, it all comes down to the fact that the airline decided to focus on revenue lines, albeit to the detriment of the number of passengers transported and the size of its market share,” notes Oleg Panteleev. “And this allows the carrier to operate with better financial performance.”