UPDATE 7: Russia gives 98 mln rbl from budget to VIM-Avia on fuel

(Adds details in paragraph 3, 6, last three paragraphs)

MOSCOW, Sep 28 (PRIME) -- The Russian government has allocated 98 million rubles from the state budget to troubled airline VIM-Avia to help it pay for fuel and bring home the passengers, according to a statement published by the government on Thursday.

“The Federal Air Transport Agency has been given budget subventions of 98 million rubles from the reserve fund of the Russian government to pay for aviation fuel, and airport and other on-land flight services to VIM-Avia,” according to the statement. Deputy Prime Minister Arkady Dvorkovich said that the funds will start to arrive on the corresponding accounts already on Thursday.

Russia’s largest airline Aeroflot said in a statement later on Thursday that state representatives on its board of directors will vote for the use of Aeroflot’s money to finance the activities of VIM-Avia. The transactions will be made under orders by the Federal Air Transport Agency, and Aeroflot’s money will be reimbursed “by mutual settlements with the industry.”

The airline has been delaying a large number of flights since mid-summer, and on Monday it admitted it had no money to continue its activities and it would have to stop charter flights.

According to the statement by the government, VIM-Avia owes the suppliers about 1.3 billion rubles.

Transport Minister Maxim Sokolov said that about 6,500 passengers with the departure date until Thursday are stranded in Turkey, and about 2,500 people are scheduled to leave each day in the period between Thursday and Sunday, after that, the traffic will fall. There are also 270 passengers of VIM-Avia in Spain.

Investigative Committee’s official representative Svetlana Petrenko said that CEO Alexander Kochnev and Chief Accountant of the airline Yekaterina Panteleyeva had been detained, while its co-owners Rashid Mursekayev and Svetlana Mursekayeva had fled the country.

Kochnev’s lawyer Mikhail Voronin said that the CEO thinks that the charges are absurd. “He has not given any testimonies yet, he is physically unable to do so because he has been in the Investigative Committee since yesterday. He will define his line of defense later, but the charges were completely unexpected and he thinks they are absurd,” Voronin said.

BANKRUPTCY SUIT AGAINST AIRLINE

Late on Wednesday, the Deposit Insurance Agency (DIA), the bankruptcy manager of Mosstroyeconombank (M-Bank), filed a bankruptcy suit against VIM-Avia to the Arbitration Court of the republic of Tatarstan on behalf of the bank over the airline’s 88.347 million ruble debt.

But on Thursday, the DIA decided to recall the suit until the government defines its position on the motion.

“Taking into account social tensions around the activities of airline VIM-Avia, the bankruptcy manager of the bank has decided to request the court to recall the suit until the government defines its position. These actions will allow us to ensure legal interest of citizens and to make decisions that are the most efficient for all participants of the bankruptcy proceedings,” the DIA said in a statement.

Aeroflot also published a statement denying earlier media reports that the company is in a competition for assets of VIM-Avia.

“In the context of information published by several media outlets concerning a start of a fight for assets and slots of airline VIM-Avia between market participants, Aeroflot denies any speculations by journalists that the company is in any fight for assets of VIM-Avia. Aeroflot is not interested in either planes or a route network, or other assets of VIM-Avia,” the airline said.

WAGE ARREARS

Sokolov said that the wage arrears to employees of the airline will soon be fully paid. “I guarantee that the wage arrears will be redeemed in several days.”

He said that a part of the state money allocated to support VIM-Avia will be spent on the current salaries and the debt will be paid in a priority order.

The minister also said that in case of bankruptcy of VIM-Avia, all employees will get new job offers. “We have an experience, I have talked to executives of the largest Russian airlines, and after solving the issues in case of bankruptcy of VIM-Avia, we will work in accordance with the established procedures and will hire all employees, they will be offered relevant jobs in Russian airlines, airports, other companies in the transport industry.”

(58.0102 rubles – U.S. $1)

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