Aeroflot buys debt-laden Transaero for 1 ruble

Aeroflot Airbus A330. Source:  cclark395 / Flicr

Aeroflot Airbus A330. Source: cclark395 / Flicr

Russia’s largest air carrier buys a 75-percent stake in competitor.

Russia’s largest airline Aeroflot plans to acquire a 75-percent stake in the country’s second-largest carrier Transaero to help save the indebted company from bankruptcy, an Aeroflot spokesman has confirmed.

This is one of the possible ways of overcoming the crisis for Transaero, whose debt totals over 160 billion rubles ($2.4 billion). The amount of the transaction is expected to be a symbolic price of 1 ruble.

According to Kommersant’s sources, the question of the purchase will be submitted to Aeroflot’s board of directors on Sept. 3. The government has approved the impending deal, the sources said.

Aeroflot has confirmed this report. “Transaero will be completely overhauled and integrated into the Aeroflot group,” an Aeroflot spokesman said.

Transaero has been experiencing financial difficulties since the fall of 2014. Among the main negative factors, the company listed sanctions and the depreciation of the ruble, which have reduced demand, as well as the restriction of flights over Ukraine.

As news of the purchase broke, the price of Transaero shares on the Moscow Stock Exchange soared by nearly 40 percent.

First published in Russian in Kommersant.

All rights reserved by Rossiyskaya Gazeta.

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