Russia’s Utair to retire another seven Boeing 737 Classics this year

Utair The Siberian carrier phases out a total of 17 of its older aircraft over the three years, whilst bringing in only three newer ones (Utair)

As a part of a radical fleet modernisation and financial turnaround strategy, Utair Airlines, Russia’s sixth largest passenger carrier, is to continue the retirement of its ageing Boeing 737 Classics, Dmitry Belokon, the company’s vice-president, revealed during the 2019 Wings of the Future conference in Moscow. According to Belokon, the airline is to phase out seven of its B737-500s by the end of this year, with five more to go in 2020.

The Surgut-headquartered carrier started retiring its 25-year vintage B737-500s last year, reducing the number in its fleet from 32 to 27 in the period. Although Utair managed to find buyers for these five aircraft, they are still included in the airline’s fleet information list on the airline’s website. As it says, the aircraft can still be used as back-up options. Belokon also revealed that next year the carrier plans to retire and sell from five to six more -500s. To compensate for the capacity reduction, the airline has leased-in one B737-800 this year, whilst its plan to take delivery of three new 737 MAXs has not materialised due to the ongoing worldwide grounding of the type. Next year, with the future of the MAX deliveries still uncertain, Utair plans to lease two more Boeing 737NGs.

Overall, apart from the B737-500s, Utair currently operates a fleet of 10 Boeing 737-800s, six B737-400s, three B767-200s and 15 regional ATR 72-500s, all of which means that the airline, which started 2018 with 66 aircraft in its fleet, may end-up with only 52 at the end of 2020.

The privately owned carrier – but with some state capital investment – is сontinuing to focus on the further restructuring of its big debts. In 2018 Utair posted a net loss of almost 22 billion roubles and, by the end of the year, owed 59.9 billion roubles to the banks. This year it technically defaulted twice on making its loan repayments. The airline has recently announced plans to cover its debts through the sale of non-core assets. Also, all of its operational revenues raised in the high season will be preserved as a liquidity cushion.

During the first half of 2019, the carrier showed some improvement in its financial performance, with Utair’s yields increasing by two per cent over the same period of 2018, reaching 25.7 billion roubles, whilst its operating loss dropped by more than 30 per cent to 1.8 billion roubles and its net loss shrank by 34 per cent. Improved efficiencies and optimised ground handling processes helped the airline drive up its average daily flight time from 7.8 to 8.6 hours per aircraft.

Meanwhile, Russia’s transport ministry has recommended that the financially troubled airline should focus mainly on achieving stability by limiting its traffic growth ambitions.

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