Yakutia and Polar Airlines to merge by September

Yakutia Airlines will receive 100% of Polar Airlines' assets (Photo by Yakutia Airlines)

Yakutia Airlines and Polar Airlines, both controlled by the government of the Sakha (Yakutia) Republic, will be merged by September this year, according to a “road map” for creation of the aviation holding, signed off by the head of the government, Galina Danchikova.

According to the document, 100% of Polar Airlines’ shares will be transferred to Yakutia Airlines’ registered capital. However, as a legal entity the Polar Airlines will continue to exist, a spokesperson for the republic’s Transport Ministry explained.

The transaction is subject to approval by the Federal Antitrust Service, and the appropriate application has already been submitted. After market-based evaluation of the Polar Airlines’ shares, the responsible authorities will elaborate the terms of privatization and file all necessary documents. These stages are expected to be completed by the end of August.

Merger of the two carriers is aimed at “competitive recovery and efficiency improvement of the republic’s air transport complex” and it is “in line with the trends that manifest themselves on the Russian market,” the government stated. According to Alexander Tarasov, general director of Polar Airlines, the merger will have a positive effect on the aviation sector in the region. Tarasov also mentioned that by the end of the summer an asset management company will be put in place, which will “accumulate the best of what we’ve got.”

The issue of merging Yakutia Airlines with Polar Airlines has been brought up repeatedly in recent years. There have also been talks of another Yakut carrier, Alrosa, also joining in the holding. First deputy director of Yakutia Airlines, Pavel Udod, earlier told Russian Aviation Insider that the merger with Alrosa was discussed by owners, and evaluation of shares was already underway, but due to the general economic conditions the process was slowed down and was only partially realized in terms of operations. For instance, the carriers “adopted similar fleet development strategies”, and their route networks are quite similar.

According to Federal Air Transport Agency’s data, Yakutia Airlines’ traffic in the first four months of 2016 showed a 13.6% YOY decline to 144,100 passengers. The carrier rates 19^th in Russia by traffic. Polar Airlines occupies the 34^th position, and it carried 24,900 passengers in January through April (up 2.9% YOY). Alrosa rates 24^th with 99,300 passengers and a 32.2% increase in traffic numbers for the same period.