Bank of Moscow to restructure Vnukovo debt given guarantees, long-term Aeroflot contracts
MOSCOW. April 13 (Interfax) - Vnukovo International Airport's biggest lender, Bank of Moscow , has approached the government with a proposal to restructure debt at the airport, which is experiencing difficulties against the backdrop of a number of factors. In exchange, the bank is asking Vnukovo for guarantees on both financing and passenger traffic.
Bank of Moscow provided a seven-year loan of 10 billion rubles to Vnukovo to refinance loans for construction of airport facilities and to repay debt owed to construction contractors, bank chief Gennady Soldatenkov said in a letter to First Deputy Prime Minister Igor Shuvalov at the end of March, an industry source told Interfax. The loan agreement stipulated discounted terms, including an interest rate of 10.95% annually, Soldatenkov said in the letter. Vnukovo has since repeatedly requested postponement of interest payments.
Vnukovo's debt to Bank of Moscow, including accumulated, unpaid interest totaling 1.4 billion rubles and debt owed to Transstroyinvest (the main contractor for construction of Terminal A and a company affiliated with Vnukovo) totals 11.9 billion rubles.
Vnukovo's financial situation deteriorated steeply late last year and early this year, for several reasons: the bankruptcy of Transaero , which accounted for over one-third of the airport's passenger traffic, the suspension of aviation links with Ukraine and Egypt, and the ban on charter flights to Turkey. All these factors combined to reduce passenger traffic - and flights - on international routes.
Vnukovo compensated a portion of the lost traffic with flights by Aeroflot subsidiaries Pobeda and Rossiya, but it has not been enough. The airport's management expects revenue to total 5.1 billion rubles in 2016, down from 6.2 billion rubles in 2015. EBITDA will amount to just 200 million rubles, Soldatenkov said.
"Due to the above-mentioned factors, the company, which manages a strategically and socially important aviation hub in the Moscow region, is currently experiencing difficulties making timely payments on its loan debt to the bank," he said.
Bank of Moscow is ready to embark on a comprehensive restructuring deal stipulating extension of the term of the existing loan and provision of additional loans to refinance costs to rebuild airport gates and debts to other creditors. The bank may provide Vnukovo with a year-long deferral on interest payments and a three-year deferral on principal payments. The loans total 16.8 billion rubles with terms up to seven years.
But the bank has conditioned the restructuring on receipt of state guarantees totaling 8.4 billion rubles to cover liabilities coming due after January 1, 2019.
Another condition is a long-term guarantee on passenger traffic on the part of Aeroflot subsidiaries. The bank feels that Vnukovo must have an agreement with Rossiya and Pobeda on use of the airport as its main transport hub in Moscow for 10 years. Incidentally, Vnukovo is the home base for both airlines and, judging by statements from Aeroflot management, there is no reason to expect them to switch to a different airport any time soon. This applies to all Moscow airports, including the new airport at Ramenskoye, which has no passenger rail link with the city and yet is asking for tariffs higher than those at Vnukovo.
Vitaly Vantsev, Vnukovo International Airport's board chairman, has repeatedly said that following Transaero's bankruptcy, the airport pins its main hopes for recovery of passenger traffic on the Aeroflot subsidiaries, as well as UTair. Although as a rule airlines sign contracts with airports for a one-year period, they can be automatically extended if neither party is opposed.
Interfax has been unable to obtain comment on the report from Vnukovo or Aeroflot.
A source in the financial and economic wing of the government told Interfax that Shuvalov had instructed the Economic Development Ministry, Transport Ministry and Finance Ministry to make proposals concerning the state guarantees and instructed the Transport Ministry, Rosaviatsia and Aeroflot to make proposals concerning an agreement with the airlines. They have until April 20 to comply.