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Government Rules Out Armavia Bailout


Armenia -- A passenger jet belonging to Armavia airlines at Yerevan's Zvartnots airport, 16Sep2010

Armenia -- A passenger jet belonging to Armavia airlines at Yerevan's Zvartnots airport, 16Sep2010

The Armenian government will not to step in to save the Armavia airline from bankruptcy and will decide soon whether to choose a new national operator or liberalize the civil aviation sector, a senior official said on Saturday.

Artyom Movsesian, head of the Civil Aviation Department, made clear that the state has no intention to fully or partly repay massive debts that led the private carrier to file for bankruptcy on April 1.

“There are no obligations on the part of the state,” Movsesian told RFE/RL’s Armenian service (Azatutyun.am). He said Armavia’s assets should be enough to clear its debts to Yerevan’s Zvartnots airport, Russia’s VTB bank and other business partners.

Armavia’s bankruptcy, which is due to be certified by court, is raising serious questions about the future of civil aviation in Armenia. The company owned by Russian-Armenian businessman Mikhail Bagdasarov carried out flights to more than 40 cities in Europe, the former Soviet Union and the Middle East until April 1.

It has incurred growing losses in recent years despite enjoying exclusive flight rights granted by the government in 2004. The government licenses were due to expire later this month.

According to Movsesian, the government is now considering three options: the creation of a state-run airline, Armavia’s replacement by another government-backed private carrier and the introduction of an “open skies” policy that would give all airlines equal access to the Armenian aviation market. Government discussions are now “in the final stage,” he said.

“We need a reliable airline, reliable partners in the areas of flight and aviation safety. Whether that will be an Armenian or foreign carrier, we will oversee everyone. I personally would like us to deal with a good operator,” added without elaborating.

Earlier this month, a hitherto unknown company, Krunk Air, declared its readiness to become Armenia’s new flagship carrier. Its chief executive told RFE/RL’s Armenian service (Azatutyun.am) that it will soon file a corresponding written application to the Armenian civil aviation authority. Movsesian did not comment on that statement.
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