Russian VIM-Avia finds itself on the verge of bankruptcy
Dozens of VIM Airlines flights were delayed at Domodedovo Airport in Moscow, with a couple of them in Pulkovo airport in St. Petersburg, Russia, during the period from September 23 to 25, 2017. While the airline assures the world that the problems are caused by the seasonal vacation time, Federal Air Transport Agency of Russia started the revision. This will probably lead to closing down the company.
From September 23, 2017, the airline postponed all flights. On September 25, 2017, it announced the establishment of external anti-crisis management and a secession of charter flights. According to Russian Information Agency, by the morning of September 26, more than 20 regular and 10 charter VIM Airlines flights were cancelled in 3 cities in Russia and also in Bulgaria, Italy, Greece, Turkey and Cyprus. More than 2 thousand passengers were stuck in the airports by the evening of September 25.
These delays are not the first ones the airline faces. In 2016 there were about 30 thousand passengers who were not able to depart on time with VIM Airlines. Back then the airline said it was caused by aircraft breakages, vacation season and attempt of a coup d'etat in Turkey, etc. However, this time it could be much serious, experts say.
Deeply in debt
Current delays are caused by the fuel debts. Domodedovo Airport, which was the hub of the airline, refuses to give it a service on credit, as VIM-Avia already owes the airport 500 million rubles (about €7,2 million). The same amount it owes to the other airports and fuel providers, and it has no money to cover any of the debts.
The airline has asked Russian Government for the financial support, but the Minister of Transport refused, stating that “it’s worthless to support VIM-Avia, because it’s almost turned out.” Information about the amount of company’s creditor indebtedness varies from 3,4 to 10 billion rubles (from €49 to €145 million) in different media sources.
As experts say the reason for such collapse is management failure. The airline started peak season without savings as it was unsuccessfully expanding on Asian markets during winter time.
On September 25, 2017, Federal Air Transport Agency of Russia started unscheduled inspection of the company, which ended up with an initiation of criminal case against VIM-Avia under the article of “Fraud”. The fraud charges are based on the suspicion that it was selling tickets under the conditions of inability to make a flight.
Stopping all operations
VIM-Avia suspended all operations on September 26. “Ural Airlines”, “i-Fly”, “Red Wings’, “Nordstar”, “Ikar”, “Nordwind Airlines” and “Yakutia” will undertake remaining flights of VIM Airlines and take tourists stuck in the airports home, as well as fully owned subsidiary of Aeroflot - Rossiya Airlines, as some sources inform. Russian Federation will pay for serving VIM Airlines flights from the Federal budget. VIM Airlines has the obligations to provide flights to 200 thousands of passengers by the end of 2017.
VIM Airlines (or VIM-Avia) is a private Russian airline, headquartered in Moscow. Founded in 2002, it is operating worldwide with 30 destinations. By July 2017 the fleet size of the airline consisted of 24 aircraft, including Boeing 777-300, 777-200, 767-300, 757-200 and Аirbus 319-111, 330-200. VIM-Avia is one of the 10 largest airlines in Russia.
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