13-Jul-2011 12:13 PM

Avianova facing short-term challenges despite expectation of profit

Avianova reportedly stated it expects to return to profit in 2012 although it is facing challenges at present as its key investor seeks to sell its stake and it is facing a lack of funds to support fleet expansion (St Petersburg Times, 13-Jul-2011). Despite this, Alf Group's investment arm A1 Investment Company has reportedly decided to sell its 51% stake in the LCC in late 2010, according to former MD of the investment group, Dmitry Chernyak (Vedomosti/Moscow Times/Moscow News, 07-Jul-2011). The LCC has reportedly been up for sale for several months, and has been offered to Aeroflot. Aeroflot, however, decided not to acquire the stake. A1 is reportedly seeking USD70 million for the Avianova stake. A1 and Indigo Partners have reportedly invested USD65 million in the airline, which requires a further investment of USD30 million-40 million. Due to a lack of funds, the carrier has reportedly cancelled plans to expand its fleet of six A320s to 10, resulting in a reduction in passenger levels and market share for the carrier.

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