Arab Today, arab today ruble fall creates turbulence for russian airlines
Last Updated : GMT 14:07:45
Arab Today, arab today
Arab Today, arab today

Ruble fall creates turbulence for Russian airlines

Arab Today, arab today

Arab Today, arab today Ruble fall creates turbulence for Russian airlines

Sheremetyevo airport terminal in Moscow
Moscow - AFP

 Their international competitors may be cheering tumbling oil prices, but the collapse in the ruble has meant major financial turbulence for Russian airlines who have expenses in foreign currencies.
The ruble has slumped by 40 percent this year against the dollar and euro, mostly due to crude oil prices falling by half in the past six months as Russia's economy is heavily dependent upon oil exports.
As jet fuel accounts for upwards of a quarter of the cost for flights, most airlines are set to see a boost to earnings.
Russian airlines also stand to benefit, but that is expected to pale in comparison to the double whammy resulting from the drop in the value of the ruble.
First, traffic on their most profitable international routes has dropped as Russians stopped travelling as their purchasing power has been eroded, not to mention ticket prices being jacked up twice by 10 percent.
Second, the airlines have considerable costs in foreign currencies -- mostly aircraft leases -- which have nearly doubled in ruble terms as the currency has slumped.
According to Deutsche Bank, Russia's leading airline Aeroflot earns 90 percent of its revenue in rubles while 60 percent of its costs are in foreign currencies.
"The situation is very serious," said Oleg Panteleyev, the editor-in-chief of the specialist website AviaPort.
"The result is obvious: as a drop in traffic is inevitable, they must return planes to lessors, reduce foreign currency costs and lower the number of planes and flights," he told AFP.
With traffic rising by 15 to 20 percent annually in recent years, Russian airlines have leased and ordered new planes from Airbus and Boeing to retire their ageing fleet of gas-guzzling Russian aircraft.
Uncertainty has hovered for weeks over the third-largest Russian airline, Utair. Unable to repay some of its debts, Alfa Bank has been trying in court to seize its aircraft.
Then this past week doubts began to surface about the finances of number two airline Transaero, which boasts a fleet of more than 100 mostly Boeing aircraft.
TASS news agency reported that it had appealed to the government for help to avoid having to suspend flights.
- Holiday connections -
Even if Transaero denounced the report as an attempt to destabilise it by competitors, the possibility of thousands of Russian tourists stranded abroad as happened this past summer when a number of travel agencies went bust was enough to prod the government into quick action.
Anxious to show it was moving to contain the effects of the currency crisis, the government promised to help airlines by subsidising domestic routes and providing loan guarantees to ensure airlines had access to funds.
On Wednesday Transaero was granted a loan guarantee of 9 billion rubles (140 million euros, $170 million). The same day Alfa Bank said it was temporarily suspending, "at the request of the government", its legal action against Utair in order to avoid disruptions to flights during the upcoming holidays.
The government has a clear short-term goal, according to Panteleyev: "the airlines must transport all the passengers over the holidays".
Russia nearly shuts down at the beginning of the year as most people take holiday between the New Year and the Russian Orthodox Christmas, celebrated this year on Thursday January 7.
Panteleyev said "obtaining loans is indispensable... to pay for jet fuel, airport fees and salaries, but it isn't sufficient to survive."
With the Russian central bank expecting the country's economy to contract by nearly 5 percent if oil prices remain at current levels and for there to be no recovery before 2017, there won't be an easy out for airlines.
- Complete upheaval -
Deputy Prime Minister Arkady Dvorkovich warned airlines that the government aid would not help unless they optimised their fleet and routes and cut costs. Their owners would also have to pump money into them, he said.
Alexei Khazbiyev, a transportation specialist with the magazine Expert, also sees dark clouds ahead for Russian airlines.
"Next year, the traffic on international flights will continue to drop and the airlines will reduce their number of flights," he said.
Khazbiyev estimated that a majority of Russian airlines will lose money and several smaller regional companies may go bust, as happened in 2008-2009.
Air transport expert Elizabeta Kuznetsova wrote in a recent commentary in the business daily Kommersant that even if the state measures "soften the pain" for airlines there risks being a "complete upheaval in the market" in 2015.

 

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today ruble fall creates turbulence for russian airlines Arab Today, arab today ruble fall creates turbulence for russian airlines

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today ruble fall creates turbulence for russian airlines Arab Today, arab today ruble fall creates turbulence for russian airlines

 



Arab Today, arab today
Arab Today, arab today Designer Aql Faqih aspires to innovation

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation
Arab Today, arab today Malaysia Airlines picks new CEO

GMT 12:54 2017 Saturday ,21 October

Malaysia Airlines picks new CEO
Arab Today, arab today Etiquette expert underlines importance of gifts

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts
Arab Today, arab today Residents get glimpse of Raqa in ruins

GMT 07:10 2017 Saturday ,21 October

Residents get glimpse of Raqa in ruins
Arab Today, arab today Hiring not part of Alibaba pledge

GMT 11:26 2017 Wednesday ,18 October

Hiring not part of Alibaba pledge
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today World's deepest lake in peril

GMT 15:54 2017 Friday ,20 October

World's deepest lake in peril
Arab Today, arab today Ex-French minister Dati wants tough action

GMT 10:54 2017 Thursday ,19 October

Ex-French minister Dati wants tough action
Arab Today, arab today Delhi braces for pollution 'airpocalypse'

GMT 16:07 2017 Friday ,20 October

Delhi braces for pollution 'airpocalypse'
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today EU raids automaker BMW

GMT 11:06 2017 Saturday ,21 October

EU raids automaker BMW
Arab Today, arab today Sweden to get biggest car factory

GMT 14:10 2017 Friday ,20 October

Sweden to get biggest car factory
Arab Today, arab today Actress Mona Zaki praises husband’s role

GMT 08:15 2017 Thursday ,19 October

Actress Mona Zaki praises husband’s role
Arab Today, arab today Massacre fears spark race

GMT 19:09 2017 Thursday ,19 October

Massacre fears spark race

GMT 08:57 2017 Wednesday ,18 October

Actress Shery Adel happy for Egypt’s qualification

GMT 18:15 2017 Monday ,16 October

British actress becomes fifth woman

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam

GMT 16:00 2017 Wednesday ,18 October

Climate-disrupting volcanoes helped topple

GMT 10:46 2017 Saturday ,05 August

Nanis reveals simple ideas for home renovation

GMT 09:56 2017 Friday ,20 October

Privacy Groups Warn of Perils

GMT 08:04 2017 Thursday ,19 October

Second US judge orders freeze

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 20:46 2017 Thursday ,19 October

Qualcomm files lawsuits in China to ban iPhones

GMT 16:53 2017 Saturday ,02 September

Mai importance of gifts during Eid Al-Adha
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday