Utair, Russia’s fourth-largest airline, could be at risk of bankruptcy

According to the Kommersant newspaper in mid-November, the airline Utair may not receive new subsidies for domestic flights due to failure to comply with previously established conditions.

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Under the previous agreement with the Federal Air Transport Agency of Russia (Rosaviatsiya), the airline was claiming the full 4.6 billion roubles, most of which it had already received. However, as reported by the same media outlet, Utair did not meet the requirements agreed with the state agency.

Between April and September 2022, the company’s turnover for passenger transport within Russia was 57% compared to the same period in 2021, when the minimum required level was 72%. Turnover from international passenger transport, meanwhile, grew by almost 300%. However, the agency assured that it will check the results of the reports submitted by Utair.

Could Utair be at risk of bankruptcy?

According to the conditions set, the airline would have to pay back the money already received as a result of the increased activity in other markets. However, it is not clear to what extent it would be able to meet this obligation and, if so, whether it could do so without suffering serious damage that could lead to the company’s bankruptcy.

At issue are the flight subsidies granted between April and October this year, totalling 100 million roubles, which were distributed among 32 airlines. While Utair was initially to receive 6.9 billion roubles, the Federal Air Transport Agency reduced the amount in September and redistributed it among other airlines.

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«The funds will be given to airlines to actually fly domestic routes», said in April Vitaly Savelyev, Russia’s Minister of Transport. «This methodology supports the passenger and encourages the carrier to fly», he added.

However, Natalya Komarova, Governor of the Khanty-Mansi Autonomous Okrug, where Utair is based, did not confirm the information about the possible bankruptcy as a result of non-compliance with the conditions. In this regard, the regional administration explained that the airline has no such difficulties and believes it will be able to cope with the situation.

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