Aeroflot ready to spin off its Aurora Airlines affiliate

The group is proposing to relinquish its share in the Russian far eastern subsidiary to the administration of Sakhalin

Aeroflot to spin off Aurora All 10 of Aurora’s Airbus A319s, nine of them previously operated by parent company Aeroflot, are scheduled to leave the fleet between 2020 and 2023 (Andrey Efimkin / Aurora Airlines)

Aeroflot is ready to part with Aurora Airlines, its easternmost subsidiary, according to an exchange of communications between the group, which owns 51 per cent of Aurora, and the administration of Sakhalin region, which holds the remaining 49 per cent.

Aurora, which was launched in 2013 with the notion to become the single airline operator for the vast far eastern territories of Russia, has fallen short of its parent’s expectations.

CHANGE OF PLANS

An exchange of letters between Aeroflot Group’s general director Vitaly Savelyev and Valery Limarenko, the governor of the Sakhalin region, suggests that Russia’s largest airline group is looking to spin off its regional subsidiary. “Having reviewed your proposal of selling the shares of Aurora Airlines, I hereby inform you that the administration of Sakhalin region is ready to start negotiations on this matter,” Limarenko wrote on May 13.

Although there is no clear explanation of Aeroflot’s motives in its letters, the decision coincided with a notorious meeting with president Vladimir Putin dedicated to supporting Russia’s airline and aerospace industry through the Coronavirus crisis. After the meeting on May 13 it was announced that Rostec-owned Red Wings Airlines would purchase up to 76 Russian-made jets within four years. It is likely that Red Wings is now the new candidate to serve as the basis for the ‘united far eastern carrier’ – the role Aurora was created for but failed to achieve.

“The option with Aurora serving as the base for the new airline had indeed been discussed. As far as I know, according to the latest information, Red Wings has been selected for the project. What the reasons behind this decision are, I can’t comment,” an official from the administration of the Sukhalin region, who opted not to be named, explained to Russian Aviation Insider.

“We have responded [to Aeroflot’s proposal] because we are not indifferent to the fate of the airline, which we co-own. The region is interested in gaining control over Aurora. What the terms of the sale would be, or when the negotiations would start – there’s no information. We are now waiting for further comments,” he concluded.

THE DAWN OF AURORA

Aurora was launched in late 2013 in the shadow of the remains of the two regional airlines Sakhalin Airways and Vladivostok Avia. The project was positioned to be a single operator for the entire vast region of Russia’s far east. However, no other neighbour regional administration co-operated and, apart from Aeroflot, the Sakhalin administration ended up as the airline’s only other shareholder, although the Primorskiy region did contribute by buying 19-seat DHC-6 Twin Otters Series 400 aircraft now operated by the airline. Sakhalin, in turn, participated by boosting the airline’s registered financial capital.

In January 2020, Aurora was criticised for not reaching the targets set by the federal government and president Putin consequently instructed the creation of a new airline for the far eastern region.

Now, with the fate of Aurora at stake, the Sakhalin region has pledged its support by saying it will continue to invest in the airline. “Our Aurora is a true regional airline. Its offer in the far eastern market is very relevant. Even in the current conditions we won’t leave it,” an official asserted.

By Artyom Korenyako

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