Moscow set to subsidise struggling ruble-hit airlines

Moscow is to set to step in to support troubled Russian airlines badly hit by the collapse of the ruble and falling passenger numbers.
Deputy Prime Minister Arkadi Dvorkovitch said today he was considering credit guarantees and subsidies worth up to USD 34 million to support struggling airlines.
He told the business daily Vedomosti that two of the top three domestic airlines, Transaero and UTair, were already in difficulty.
"Firstly (we are looking at giving) companies credit guarantees which are very powerful because they give banks an interest in resolving the problem," he said.
"Second comes subsidies for domestic flights. We are ready to widen the number of subsidised routes to make connections viable," he added.

The newspaper said Transaero will begin to benefit from credit guarantees this week.

Airlines have been among the first hit by the currency crisis because of the international nature of their business and the landing charges they must pay in foreign currency.
The price of air tickets has jumped twice by 12 per cent and then 14 per cent as the ruble has tumbled against the euro and the dollar.
With rising prices, passenger numbers have dropped back sharply in recent months.
Yesterday the TASS official news agency said Transaero, the country's second airline, had asked for state help claiming there was "a risk of flights being suspended before the end of the year because the company did not have the money to pay its sub-contractors."

The company denied it was about to cut flights, claiming there was a campaign to "discredit" it, but admitted that as during the crisis of 2008-2009, public help was needed.
The leading regional carrier UTair is having trouble repaying its debts to Russia's Alfa Bank, which took it to court in early December and threatened to seize part of its fleet. The company claims it is working normally despite the legal action.
The airline made world headlines in November when passengers on one of its flights from Siberia had to get out and push their plane in temperatures of minus 52 degrees Celsius after the parking brake froze shut.