Russian airline VIM-AVIA heads for receivership

Anna SMOLCHENKO
A VIM-AVIA plane is seen parked at Moscow's Domodedovo airport on September 26, 2017

Tens of thousands of passengers were stranded Tuesday as Russian airline VIM-AVIA said it could no longer operate without state help but the government said it was not planning to prop up the carrier.

VIM-AVIA, Russia's 10th largest carrier, said it was planning to go into receivership due to financial hardship and called for state support as tour operators urged the authorities to help avert an industry-wide crisis.

But Transport Minister Maksim Sokolov said on Tuesday propping up the failing carrier was not economically sound.

"State support does not make sense any longer because this company has practically stopped its operations," he said.

The private company has cancelled dozens of flights over the last few days, including all its charter flights.

Some 43,000 passengers had flown out with the carrier to Turkey, Greece, Italy and Spain and are now believed to be stranded abroad, said Turpomoshch (Tourist Help), an association of tour operators.

Overall, some 200,000 passengers were expected to be affected and the Russian authorities were putting together a plan to bring travellers home.

"Our task right now is to transport passengers who have VIM-AVIA tickets on their hands," transport ministry spokesman Timur Khikmatov told AFP.

Earlier in the day VIM-AVIA said it was in a dire economic situation.

- 200,000 passengers affected -

"Working capital has dried up, financing has been frozen and airport services have been suspended," the carrier said in a statement.

"And because the airline cannot fly without additional financing we are planning to go into receivership," the company added.

VIM-AVIA is Russia's 10th largest carrier in terms of passenger numbers.

Russia's Association of Tour Operators appealed to the government to avert an industry-wide crisis, saying the battered airline had accumulated between 3 billion rubles ($52.2 million) and 10 billion rubles ($174 million) in debt.

The association said some 200,000 passengers including 100,000 Russian tourists who had planned to go on vacations in Russia and abroad may be affected.

"The suspension of the airline's work will first and foremost affect these flights which would lead to a collapse of the tourist and aviation markets," the industry group said.

Irina Tyurina, spokeswoman for the Russian Tourism Industry Union, said the airline had sold tickets to fly between 50,000 and 80,000 tourists to Turkey, Greece, Moscow-annexed Crimea and the Russian Black Sea resort of Sochi.

- Struggle to get home -

In the Belgian city of Liege more than 340 Chinese tourists were stranded after their flight back home was cancelled Monday night and half of them had to spend the night at the terminal, said airport spokesman Christian Delcourt.

"They are ending a beautiful trip to Europe with serious difficulties in getting home," he told AFP, adding the small airport was facing such a problem for the first time.

VIM-AVIA has not been able to pay Domodedovo Airport in Moscow, its home base, and from Tuesday its flights have been transferred to the city's Vnukovo Airport until all passengers have been flown home.

Earlier this week investigators accused VIM-AVIA executives of "stealing passengers' money" and opened a criminal case.

The Investigative Committee said the carrier continued selling tickets when company executives knew the airline had no money to purchase fuel. It accused them of stealing more than 1 million rubles ($17,300).

Experts say that Western sanctions, low oil prices and a weak ruble have eroded Russians' purchasing power and dealt a heavy blow to the aviation industry.

A decision by the government to ban charter flights to Turkey amid tensions with Ankara in 2015 also affected airlines.

Transaero, Russia's second-largest airline and the country’s largest privately-owned carrier, collapsed in 2015 due to heavy debts.