You're reading: Wizz Air seeks troubled AeroSvit’s routes

 AeroSvit, which is undergoing bankruptcy proceedings and has abandoned many of its routes, may never get them back.

Wizz Air, the
low-cost carrier in Ukraine, has applied for 18 newly vacant routes, including
the most lucrative ones of Tel Aviv, Istanbul, Dubai, Moscow, St. Petersburg
and others.

Akosh Bush, head
of Wizz Air Ukraine says the company expects the decision of the State Aviation
Service within weeks.

“Because of the bankruptcy
of Aerosvit, there is a possibility that the Ukrainian market will be further
monopolizing, which would not benefit consumers… Ukrainian passengers had to
put up with high prices and frequent cancellations of flights of some Ukrainian
companies. And the threat of the creation of a monopoly, which exists now, can
lead to further prices increases for the limited supply (of flights),” Bush
said during a press conference on Jan 22 in Kyiv.

With the exit of AeroSvit, controlled by Ukrainian
billionaire Ihor Kolomoisky, only Ukraine International Airlines remains as a
dominant carrier in Ukraine. Kommersant newspaper reported on Jan. 17 that
Kolomoisky had acquired a 75 percent stake in Ukraine International Airlines at
the end of 2012, but the airline denied it.

Up until these events, Kolomoisky had all but monopolized
Ukrainian air travel. His combined assets allowed him to enjoy control over 60
percent of Ukraine’s air transport market. According to Forbes Ukraine,
billionaire Viktor Pinchuk also has a 24.99 percent of stake in AeroSvit. 

Wizz Air should
be able to handle new routes as they are set for a new, third aircraft by March
and a fourth one by July. The company also says it will expand to eight
aircrafts later.

Meanwhile, AeroSvit
goes through more turmoil as hundreds of its employees protested outside the president’s
administration in Kyiv on Jan. 22. The furious cabin crew and other workers say
they have not been paid salaries since October and all are now facing layoffs.

“This is not our
problem now. This is the problem of the president. Does he need 2,000 qualified
people on the street, registering as unemployed and receiving all benefits? I
don’t think so,” says Veniamin Tymoshenko, a union leader who works as a flight
attendant on AeroSvit.

Hundreds of
protesters demanded that the bankruptcy process be stopped and the criminal
case be opened against Kolomoisky on grounds of intentional bankruptcy fraud.

“We work on
these flights and we see that almost all the time the aircrafts are full of
passengers. The tickets do not cost little. Also, Kolomoisky owns the fuel
supplier company Ukrnafta. He also leases some aircrafts to himself. How, given
all this, how can the company be in such massive debt?” Tymoshenko said as
hundreds of his colleagues shouted “Give us back our sky!” 

“There has
always been this problem with Aerosvit…When we protest – they pay us something.
Then we stop – and things go back to how they used to be,” says another flight
attendant who refused to give his name because he fears retaliation.

The economic court in Kyiv Oblast, after considering an application from
the private joint-stock company AeroSvit airlines on Dec. 29, commenced
bankruptcy proceedings. The case will be heard on Jan. 23.

The ruling says that, as of Dec. 27, the airline had a
debt of Hr 4.27 billion ($533 million) to its creditors. According to the
balance sheet as of Sept. 30, 2012, the total assets of AeroSvit stood at Hr
1.467 billion.

The airline later said that the submission of the
claim was made as a part of its restructuring to launch a readjustment
procedure, restore the airline’s solvency and ensure the fulfillment of its
liabilities to creditors.

Meanwhile, out of 80 AeroSvit routes, only six will
remain active through the end of January, The company promises to keep
international connections to Bangkok, New York and Beijing, and domestic
flights between Kyiv, Ivano-Frankivsk and Dnipropetrovsk running through Jan.
30.

AeroSvit blames
the staff for the financial troubles of the company. “The management of the
trade union has repeatedly declined to sign new work agreements, as the
previous ones were signed before the crisis when the industry was growing fast…
As a result, the salaries…became one of the key factors that caused financial
loses of the company, resulting in reorganizing of the company, and laying off
the staff,” reads the official Jan. 22 statement of the company.

AeroSvit urges
its employees to negotiate and “stop using ultimatums.”   

Aside from
salaries, AeroSvit staff demands that the prosecutor of Kyiv Oblast and State
Aviation Service be prosecuted for failing to react to their complaints made
months ago. “We suspect that they were deliberately ignoring us while the money
was siphoned out of the company,” Tymoshenko says.   

The Kyiv Post
was unable to reach Kolomoisky for comment. He is known for not being very open
to the public and rarely gives interviews.

He has a history of
failed aviation
companies – Aerosvit’s partner Donbassaero and
Dniproavia — also owned by Kolomoisky, appear to be facing dire financial
situations. Donbassaero on Jan. 10 filed for bankruptcy, according to
Interfax-Ukraine news agency. Dniproavia has suspended its flights, according
to UNIAN news agency. 

In May, Kolomoisky’s three low-cost European airlines,
Cimber Sterling in Denmark and Skyways and City Airline in Sweden, filed for
bankruptcy.

 

Kyiv Post staff writer Svitlana Tuchynska can be
reached at tuchynska@ kyivpost.com