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Armavia Proposes Rescue Plan To Avoid Bankruptcy


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.

Armenia’s troubled national airline, Armavia, has asked the government to help it avoid bankruptcy with tax breaks and other measures that would support its renewed operations.

The debt-ridden company drew up a rescue plan nearly one month after saying that it will file for bankruptcy because of mounting losses. Armavia flights to more than 40 cities in the former Soviet Union, Europe and the Middle East were discontinued immediately after the announcement of the move on April 1.

Armavia was expected to ask an Armenian court to open formal bankruptcy proceedings that are required for liquidating companies operating in the country. But it has still not lodged such a request.

The private carrier owned by Russian-Armenian businessman Mikhail Bagdasarov now seems to be having second thoughts about the bankruptcy. The newly publicized rescue plan says Armavia can resume flights if it is exempted from a fixed $25 tax on all tickets, gets a 30 percent price discount for airport ground services and is allowed to import fuel for its own planes.

The program has already been discussed by the Public Council, an advisory body formed by President Serzh Sarkisian. Izabella Muradian, a member of the council, said on Wednesday that it has asked the Armenian government to approve the concessions sought by Armavia.

The government has not yet discussed the matter. The head of its Civil Aviation Department, Artyom Movsesian, made clear last month that the government will not step in to save the airline from bankruptcy. Movsesian said it will decide soon whether to choose a new national operator or liberalize the civil aviation sector.

Shahen Petrosian, who managed the department in the early and mid-1990s, dismissed the Armavia plan as unrealistic. “Even if those demands are met Armavia will not clear its huge debts and remain afloat,” he told RFE/RL’s Armenian service (Azatutyun.am). “Therefore, I think that rescuing Armavia would not make sense. A new company should be set up.”
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