Sberbank and VTB bank may use UTair as a resource for a new project of a regional airline based on either a new or existing company. The banks may convert the company’s debt to Sberbank into shares. The airline company is currently experiencing trouble repaying debts and bankers doubt that UTair will be able to meet its liabilities.
On December 20, 2018 the company announced default and its creditors did not receive around RUR 1 bio ($15 mio) of one of the syndicated loans. The airline asked the syndicate that includes Sberbank to restructure its loans.
Starting an airline company from scratch is a hustle and involves substantial nonrecoverable losses, according to banks’ officials. Sberbank and VTB would rather prefer a partnership with the future regional airline, including business model development, loans and leasing.
The banks are reluctant to disclose their plans and are considering several options.
UTair is Russia’s fourth largest airline company. In 2018, it transported 7.9 mio passengers. The company’s main owner is Surgutneftegaz controlling over 50% via a non-government pension fund. Other shareholders include authorities of the Khanty-Mansi Autonomous Area (38.8%) and Tyumen Region (8.4%). The airline has been trying to recover from crisis since 2014. As part of its previous restructuring in November 2015, its creditors cobverted the company’s debts into two syndicated loans, a 7-year loan of RUR 18.9 bio ($282 mio) and a 12-year loan of RUR 23.7 bio ($354 mio). It was agreed that the company will pay accrued interest at the initial stage and start repaying the principal amount in 2020.