VIM Airlines to discontinue scheduled services

VIM Airlines will be assisted in returning stranded passengers by seven Russian carriers The carrier owes over $120 million to banks (Sergey Korovkin 84 / Wikimedia)

Troubled VIM Airlines is to discontinue scheduled operations on October 16, the Russian Transport Ministry has reported. The carrier has encountering severe financial difficulties and is facing external management.

The move will result in cessation of most of the airline’s activities (scheduled flights accounted for over 80% of its total traffic in 2016). Earlier, the ministry announced the closing of VIM’s charter program.

Russian airports and fuel providers have agreed to continue servicing VIM Airlines flights, and the carrier’s former base airport Domodedovo will release five VIM airliners despite a hefty outstanding debt accumulated.

Those passengers who have bought VIM Airlines tickets effective after October 16 are advised to have them refunded.

VIM will be assisted in transporting its remaining passengers on scheduled and charter flights by seven other Russian carriers, namely by Ural Airlines, iFly Airlines, Red Wings, NordStar, Pegas Fly, Nordwind Airlines, and Yakutia Airlines.

RIA Novosti news agency quotes Alexander Neradko, head of the Federal Air Transport Agency (FATA), as saying that VIM Airlines owes about 7 billion rubles ($121.7 million) to six banks.

In his September 27 report to parliament, Neradko said that the airline’s 2016 financial statement had raised no suspicions as to its standing, leading FATA to ascribe it to the category of the most financially secure carriers.

Meanwhile, VIM co-owner Rashid Mursekayev in September this year asked FATA to help the airline settle its debts with the creditors, Neradko added.

Vedomosti daily quotes sources in the airline as saying that the financial problems had developed due to a cash gap: the carrier has yet to receive 500 million rubles in Q3 VAT refund. Kommersant daily reports that the operator turned to the government with a request for state guaranties worth 800-840 million rubles so it could refuel the aircraft intended for returning stranded passengers from abroad.

On the back of the crisis, Russian President Vladimir Putin has demanded from Transport Minister Maxim Sokolov to toughen the assessment criteria for airlines’ financial stability.

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