Sale of Qazaq Air proceeding slowly, Kazakh govt approval expected by year's end

ALMATY. Dec 23 (Interfax) - Kazakhstan's sovereign wealth fund, Samruk-Kazyna, has completed key negotiations as part of the deal to sell the subsidiary airline Qazaq Air to Vietnam's Sovico Group, Samruk-Kazyna's co-managing director for strategy and asset management Yelzhas Otynshiyev said.

"On December 20, a meeting of state commission on economic modernization approved the main terms of the deal. We anticipate a final decision on the deal from Samruk-Kazyna's board and the government before the end of the year," Otynshiyev said during a government hour on Monday.

Under the agreement, Sovico must fulfill two key requirements - clearing Qazaq Air's debt of 38.4 billion tenge (around $79 million) by the end of 2044, and acquiring at least 20 new Boeing or Airbus aircraft within five years, which is the minimum amount previously discussed. The delivery timeline could be extended by two years if needed.

"Sovico is ready to pledge guarantees to meet these obligations. We believe overall that this partnership will strengthen Kazakhstan's civil aviation sector and support related industries such as logistics, tourism and trade, including through additional international flights," Otynshiyev said.

Samruk-Kazyna first announced plans to sell its 100% stake in Qazaq Air in May, with Sovico's Aviation Holdings Company agreeing to purchase the airline for $4 million. The deal is expected to be closed by the end of September.

As part of the agreement, Sovico has committed to expanding Qazaq Air's fleet with at least 20 Airbus or Boeing planes over the next five years, with the possibility of increasing the fleet to a maximum of 50 aircraft. Total direct investments are projected to exceed $1 billion.

The agreement also requires Sovico to fully repay Qazaq Air's outstanding debt, previously estimated at $79 million.

As of December 23, the exchange rate is 523.86 tenge/$1.