Volga-Dnepr Group / Press-center / Media Coverage

Volga-Dnepr left Aeroflot behind

10/27/2006

Within 9 months of 2006 Volga-Dnepr Group managed to overcome Aeroflot on the overall volume of cargo transported, increase sales by 50% and plans to make it over $600 million within the financial year. Although industry experts deem these measures premature due to unsettled corporate conflict between shareholders of Volga-Dnepr Airlines.

Yesterday Volga-Dnepr Group presented intermediate operational and financial results of business. Within 9 months of 2006 the Group carried over 95 thousand tons of cargo (January – August 2005 – 57.9 thousand tons). According to Transport Clearing House, the Group took the lead ahead of Aeroflot, which claimed leadership not only in passenger services but also in cargo operations, but decreased traffic from 95,3 thousand tons in 2005 to 91,5 thousand in 2006.

Group sales increased by 55% and amounted to IFRS $462 million. Annual revenues are expected at the level of $600 million. "This is the best profit index since Volga-Dnepr Group establishment, year of 2006 proves to be most successful", - said Sergey Shklyanik, Group Senior Vice-President. He stated, "Net profit will amount at $7 million in comparison to $3 million of loss last year".

Aeroflot admits decrease in traffic. "We had that decrease in imported and transit cargo on international flights", - said Andrey Goryashko, Aeroflot Cargo General Director.- "There are two major factors. First is the enhanced customs' rules and measures against gray import. Second is strict sanitary control over transporting live animals". According to Goryashko, for instance, a mandatory requirement of transit cargo shipment documents. As a result, shipment of fish from Norway to Japan was stopped for a few months.

Volga-Dnepr Group consists of Volga-Dnepr Airlines and AirBridge Cargo. The first operates ten АN-124 and eight IL-76 freighters in charter freight transportation all over the world. The second operates a four B747 fleet in scheduled cargo flights from Europe to Asia. Majority shareholders are Group top-management chaired by Alexei Isaikin and KASCOL Group of Sergey Nedoroslev.

Positive financial results enable Volga-Dnepr Group to arrange IPO within half-year. "IPO is an important issue, we can do it within the first quarter 2007 in case of persistent work", - said Sergey Shklyanik. The Vice-President noted that IPO could be possible if sales grow to the level of $600 million and all shareholding conflicts are resolved.

"I think that VDA's IPO is feasible, although it is too early to plan it for the beginning of 2007", - says Vitaly Baikin, Centreinvest Securities investment company analyst. – "It is obvious that conflict is a peril for public offer".

It is important to say that the conflict between VDA management and KASKOL Group is still unsettled. The parties take part in the legal proceedings concerning 16% of shares of Volga-Dnepr Airlines, which were transferred from VDK-Invest, LLC (controlled by KASKOL) to Airline's management. Volga-Dnepr Group claimed it's rights for purchase of shares in accordance with Special Conditions Agreement dated 2002. KASCOL managers deem these actions illegal and claim that Alexey Isaikin went beyond his authorities. "It looks like robbery", - said Sergey Nedoroslev. – "The issue is still unsettled. We have obligations to sell our block of shares (33% plus 16% - subject of proceedings. – Ъ) to Region Investment Company, and we are going to perform them by all means".

Kommersant Daily

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