Mikhail Bagdasarov, the Russian-Armenian owner of Armavia, has decided to sell Armenia’s national airline and is currently negotiating with potential buyers, a company spokeswoman said on Wednesday.
“Negotiations are going on. There are no results yet,” the official, Nana Avetisova, told RFE/RL’s Armenian service (Azatutyun.am).
“There are different potential buyers,” she said. “Among them are Armenians not living in Armenia. There are also foreigners from the West, from Italy.”
In Avetisova’s words, Bagdasarov wants to sell the carrier because its has been operating at a loss for the third consecutive year. The losses have resulted, in large measure, from a decrease in air passenger traffic to and from Armenia handled by Armavia, she said.
Armavia’s poor financial state is evidenced by millions of dollars in outstanding debts to Yerevan’s Zvartnots international airport managed by an Argentine company. The airport management periodically delays Armavia flights over the company’s apparent failure to pay the debts on time.
Armenia - The owner of Armavia and Mika corporation Mikayel Baghdasarov at a press conference in Yerevan, 06 July, 2011
Bagdasarov threatened to file for bankruptcy during one such dispute in March. He said his company can no longer afford what he called exorbitant fees charged by Zvartnots for airport ground services.
Bagdasarov, who is a Russian citizen of Armenia descent, is also locked in a serious dispute with the state-run manufacturer of Russian Sukhoi SuperJet 100 aircraft. Armavia rescinded last month a 2007 agreement to buy two such planes, saying that they have proved to be too costly and not reliable enough. The Russian aviation group Sukhoi is reportedly seeking a hefty financial compensation for the move.
Armavia was founded by Bagdasarov and became Armenia’s leading carrier in 2004 following the bankruptcy of the state-run Armenian Airlines carrier. It currently flies to more than 40 destinations in Europe, the former Soviet Union and the Middle East. It is often criticized by Armenians for what they see as disproportionately high ticket prices and inadequate quality of service.
Shahen Petrosian, a former head of Armenia’s civil aviation authority, claimed on Wednesday that Armavia has incurred massive losses because of having been badly managed. Petrosian said the Armenian government should nationalize the company and then sell minority stakes in it to domestic investors. He also urged the government to “liberalize the aviation sector” by helping to create a domestic competitor for Armavia.