Aeroflot considers a part-IPO for Pobeda, its budget airline daughter company

Aeroflot may float up to 25 per cent of Russia’s only low-cost carrier subsidiary :: Pobeda

Aeroflot is considering the prospect of a partial initial public offering (IPO) for its low-cost subsidiary Pobeda Airlines, Russia’s only budget carrier and may float up to 25 per cent of its capital, Aeroflot’s general director Vitaliy Saveliev has revealed to Interfax newswire.

“At a board meeting earlier this year we discussed Pobeda’s IPO, but [for] only a small part of [the package]. Giving up control of the [entire] company is, in my view, counterproductive. We (the Group) have a target to serve 100 million passengers by 2023 [in a new strategy]. With Pobeda, we can achieve this, but without it [the target becomes] unrealistic,” Saveliev believes, commenting the suggestion for complete privatisation of Pobeda offered by Russia’s Federal Antitrust Service. So Saveliev confirms: “Up to [only] 25 per cent of Pobeda may be on the table, subject to corporate approval.”

At which stage in Pobeda’s development will such an IPO plan become a viable reality? “Just recently, Pobeda’s [value] was assessed at some US$600 million,” Saveliev says. “Now it has 30 aircraft and the estimate we hear from analytics is [the value now lies] between $800 million and $1 billion. I cannot disclose the possible timeframe for the sale ahead of its time. This is a decision that is up to the board of directors, but we’re working on it. Also, since the beginning of this year, we have been collaborating with some Russian banks on this subject.”

Saveliev has not ruled out the sale of Pobeda to a strategic investor.

Pobeda, which is Russia’s only LCC, flies single-class Boeing 737-800s and is currently 100 per cent-owned by Aeroflot. The budget airline is continuing to demonstrate the highest traffic growth performance amongst Russia’s top five airlines, with an impressive 51.4 per cent year-on-year improvement in July of this year. By the end of 2019, the no-frills carrier is planning to serve no less than 10 million passengers.