Aerosvit Airlines

Ukraine International to double international network as Aerosvit restructures

Ukraine’s largest carrier Aerosvit has entered a period of restructuring after filing for bankruptcy on 28-Dec-2012. At the core of the airline’s reorganisation is a large network shake-up which will see rival Ukrainian carrier Ukraine International Airlines (UIA) take over nearly its entire international network.

While UIA stands to benefit significantly, adding at least 30 routes, Aerosvit’s operations will significantly reduce in size. If it survives the bankruptcy, Aerosvit will be left as primarily, or perhaps entirely, a domestic operator.

Aerosvit hopes to continue operating during its reorganisation, which is aimed at restoring the airline’s operational efficiency and improving profitability, and retain five medium-haul and five-long haul international routes. But the airline’s ongoing operations have been disrupted with incidents involving its aircraft being impounded at various airports causing issues across its network.

Ukraine International plans to expand into long-haul operations in 2013 with Bangkok and Beijing

Ukraine International Airlines (UIA) is planning to expand into the long-haul market in 2013 with widebody aircraft being added for flights to North and Southeast Asia. The eastbound expansion marks a significant milestone for UIA as it will help balance out a western-focused network and help the carrier continue to build its transit hub at the Ukrainian capital Kiev. Asian expansion will also result in more intense competition with Ukraine’s other major carrier, AeroSvit, which already operates widebodies and is planning later this year to double the size of its for now small network in North, South and Southeast Asia.

UIA CEO Yuri Miroshnikov told CAPA on the sidelines of last week’s IATA AGM in Beijing that the privately-owned carrier aims to launch services to Bangkok and Beijing in 2013. UIA is now seeking to lease at least two widebody aircraft to support the new flights, most likely Boeing 777s although A330s are also being considered. 767s, which AeroSvit currently operates to Bangkok and Beijing along with other medium/long-haul destinations, is not under consideration according to Mr Miroshnikov due to their relatively higher seat costs.

AeroSvit expands while Ukrainian Government hints at full privatisation

Ukraine’s leading carrier, AeroSvit Airlines, is steadily expanding while the Ukrainian Government has been hinting at impending privatisation of its remaining stake in the carrier. The next six months will see the airline significantly increase capacity over summer while continuing to operate significantly more capacity in winter 2012/13 compared to the previous year.

AeroSvit is the largest carrier in Ukraine by capacity with about 30% of total system capacity. Ukraine International Airlines (UIA) is currently the country’s second largest carrier, accounting for about 17% of the overall system capacity.

The Ukrainian Government sold its 61.6% stake in UIA to three existing minority shareholders in Feb-2011 including UIA Beteiligungsgesellschaft mbH, which became the majority shareholder with a 59% stake in the carrier. In May-2012 it was reported that Ukraine's Government plans to sell its 22.39% stake in AeroSvit Airlines in 2012 or 2013. The Government’s stake is currently worth approximately USD542,000.

European airlines report single-digit traffic growth in 2010; profits remain weak

European airlines reported single-digit growth last year - a welcome improvement from 2009's depressed level - but 2010 was a lacklustre year overall. Full year data has been released by the Association of European Airlines (AEA), the European Low Fares Airline Association (ELFAA) and EUROCONTROL. As noted by EUROCONTROL, growth across the continent last year was driven mainly by LCCs.