Its expansion worsened the airline's performance

Despite the opening of new routes, Dniproavia airline ended 2009 with a record loss of UAH 274 million. Last year, the airline used its fleet inefficiently—its planes flew less frequently than competitors, experts say. But this year the carrier can significantly reduce losses by merging its fleet and routes with Aerosvit and Donbassaero.

In 2009, Dniproavia was unable to improve its financial performance: its net loss increased by 27.77%, to UAH 274.72 million, although revenue increased by 81.4%, to UAH 675.81 million, the carrier reported in the official press on Friday. The company's performance was prevented from improving by higher prices for fuel and rental of Boeing 737 and Embraer 145 aircraft, rising exchange rates and falling passenger traffic, Dniproavia explained. The company also increased costs for airport, navigation and maintenance services due to the increase in the number of routes.

Despite its performance indicators, Dniproavia serves the largest fleet among Ukrainian air carriers and continues to expand it. The company currently operates 11 regional Embraer 145s and 6 medium-haul Boeing 737s. And this year it plans to lease another 14 Embraer 145s from bankrupt Alitalia (see Kommersant on February 8). Leasing each, according to experts, costs at least $50 thousand per month.

OJSC "Dnepravia" was created in 1996. It includes the airline of the same name and the Dnepropetrovsk international airport. Since last year, 94.57% of the airline’s shares through Galtera LLC belong to structures close to the shareholders of PrivatBank. Last year, the airline carried about 620 thousand passengers (+43.52% compared to 2008).

This is not the first year that Dnepravia has been experiencing financial problems. Since 2004, the company has been going through bankruptcy proceedings, and in 2008 its loss increased 32.2 times - to UAH 215 million. “Last year, the company’s creditors increased its debts in order to later buy it cheap during the privatization process and cut off potential competitors,” says Alexander Kava, director of the Center for Political and Economic Analysis. Galtera LLC, controlled by the shareholders of PrivatBank (the airline's largest creditor), bought 95% of Dnepraavia shares for only $7.4 million (see Kommersant dated August 31, 2009).

Immediately after the privatization of Dniproavia, the chairman of the Dnipropetrovsk regional state administration, Viktor Bondar, said that co-owner of PrivatBank Igor Kolomoisky intends to invest $114 million in Dniproavia, as well as repay UAH 440 million of accounts payable within two weeks. Whether these plans were carried out is still unknown.

However, there is an objective reason for the growing losses of Dnepravia - ineffective use of the fleet. The company's aircraft have an average flight time of 4-5 hours a day, while the aircraft of the largest Ukrainian carriers have an average flight time of 10-12 hours. “The airline can reduce losses this year through more active use of the fleet. First of all, on the Aerosvit network,” says Mr. Kava. Now Dnepravia, Aerosvit (52% of the shares are owned by structures controlled by the owners of PrivatBank and co-chairman of the company’s supervisory board Grigory Gurtovoy) and Donbassaero (part of an alliance with Aerosvit) are working out a new model of cooperation. Chairman of the Board of Dnepravia Sergei Tkachenko previously said that, in addition to code-sharing agreements, mutual use of the companies' resources is possible. Dniproavia has already subleasing a Boeing 767 to Aerosvita.

Elena Sinitsyna

The fleet sinks Dnepravia