Armenia’s national air carrier, Armavia, has decided to stop operating flights and file for bankruptcy on April 1 after struggling to pay its current debts for months.
In a statement released on Friday the airline explained that its owners could no longer invest into that business by taking funds from other sectors of their interest.
“Aviation is a field where one has to make continual improvements. For three years the owners of Armavia have drawn investments from other businesses to invest into efforts to sustain the airline’s growth. However, it is no longer possible to continue like that,” said the press service of Armavia.
The struggling airline has been in recurrent disputes with Yerevan’s international airport, Zvartnots, and air navigators over outstanding debts for services that often resulted in delays and cancellations of flights causing inconveniences for Armavia passengers.
Armavia’s Russian-Armenian owner, Mikhail Bagdasarov, indicated late last year that he intended to put up his loss-making company for sale and was reportedly in negotiations with potential buyers in recent month.
It is not clear yet whether a private or a state-run company will replace Armavia as Armenia’s national air carrier.
Armavia itself was established following the bankruptcy of the state-run company, Armenian Airlines, over a decade ago. It operated flights to more than 40 destinations in Europe, the former Soviet Union and the Middle East, with some of them being exclusively reserved for it under an agreement with the Armenian government. This, critics said, often resulted in disproportionately high ticket prices and inadequate quality of service.
Economist Armenak Chatinian believes it is not without a reason that Armavia has decided to file for bankruptcy now that its monopolistic rights are just about to expire. The agreement signed between the airline and the government ends on April 22.
“Now the airline’s bankruptcy simply suits its founder, because it has accumulated considerable debts, but it is not clear what assets the company actually has,” says Chatinian, an economic commentator for the local daily “Orakarg”.
At a news briefing on Thursday head of Armenia’s Civil Aviation Department Artyom Movsesian advocated a ‘political approach’ in settling the situation with Armavia.
“We can have both a state-owned airline and a private one, as well as an open skies policy. No doubt, each option has its positive and negative aspects. In order for us to be able to weigh it properly, the government must show a general approach,” said Movsesian, without elaborating.