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Armenian Government Warns Debt-Ridden National Airline


Armenia - Armavia's newly purchased Sukhoi SuperJet 100 plane at Yerevan's Zvartnots airport, 19Apr2011.

Armenia - Armavia's newly purchased Sukhoi SuperJet 100 plane at Yerevan's Zvartnots airport, 19Apr2011.

The Armenian government issued a stern warning to Armavia, the struggling national airline, on Friday amid its continuing financial dispute with Yerevan’s Zvartnots international airport increasingly disrupting the country’s air traffic.

Armavia flights from Zvartnots were suspended for several hours for the second consecutive day after the airport management accused the private carrier of failing to repay on time its outstanding debts incurred for ground services.

Armavia planes have been repeatedly grounded for the same reason over the past year. The airline and the airport supposedly settled the dispute when they reached a debt-restructuring agreement in March. Armavia’s debt exceeded $6 million at the time.

Late last month, Zvartnots’s Argentine operator accused the airline of failing to honor a new debt repayment schedule envisaged by the deal. According to the airport, the total Armavia debt was supposed to have fallen to about $2.4 million by now. It reportedly stood at $3.2 million as of Friday morning.

Armavia made a fresh debt payment later in the day, allowing for the resumption of its flights. A company spokesperson insisted that it is gradually repaying the debt and criticized the punitive measures taken by Zvartnots.

Meanwhile, Armenia’s civil aviation authority, which helped to broker the March agreement, indicated that the government is losing patience with Armavia. “Of course we are not happy with this situation,” Artem Movsesian, head of the government agency, told RFE/RL’s Armenian service (Azatutyun.am).

“The position of the country’s leadership and myself is that Armavia should try to solve these problems within a very short period of time,” he said. “Or else, the company could face the closure of its operations.”

Movsesian noted in that regard that Armavia’s agreement with the government giving it the exclusive right to carry out international flights from Armenia expires in March next year. Under that agreement, criticized by opposition politicians and independent analysts, foreign airlines need Armavia’s permission to fly to the country.

Movsesian stressed at the same time that the government still hopes to avoid taking “drastic measures” against the unpopular carrier. “I have spoken to the Armavia director general today,” he said. “He told me that they are consistently working towards the accumulation and payment of sums [owed to Zvartnots.] But the situation is tense.”

“We have seen and know that there can be crisis situations in civil aviation. Many companies have overcome such situations,” added the official.

Armavia’s Russian-Armenian owner, Mikhail Bagdasarov, appears to be pessimistic on that score, having decided to put up his loss-making company for sale. An Armavia spokeswoman said late last month that Bagdasarov is already negotiating with potential buyers.

Armavia was founded by Bagdasarov and became Armenia’s leading carrier in 2004 following the bankruptcy of the state-run company Armenian Airlines. 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.
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