Last updated: 04:52 PM ET, Thu September 03 2015

Russian Flag Carrier Aeroflot to Acquire 75 Percent of Transaero for One Rouble

Airlines & Airports | Patrick Clarke | September 03, 2015

Russian Flag Carrier Aeroflot to Acquire 75 Percent of Transaero for One Rouble

Russia's leading airline, Aeroflot, has announced that it will acquire a 75 percent stake in competitor Transaero, creating one of the world's largest air travel companies in the process, Reuters reported.

The investment comes at a disappointing time for Transaero, with the airline's net debt totaling 106 billion roubles ($1.63 billion) at the end 2014.

Citing an industry source, Reuters reported the purchase would cost Aeroflot one rouble ($0.01).

An Aeroflot spokesman said that Russia's second-largest carrier "will be completely overhauled and integrated into the Aeroflot group," per Reuters.

In a statement, Saint Petersburg-based Transaero confirmed that the deal was agreed on Tuesday during a meeting with Russia's First Deputy Prime Minister Igor Shuvalov.

While Transaero has been hit hard by the country's ongoing economic crisis, the entire Russian aviation industry has been struggling of late. The Russian Association of Air Transport Operators said the industry lost 30 billion roubles ($461 million) last year compared to a loss of only 4.7 billion roubles ($70 million) in 2013.

Although passenger numbers are up for both airlines through the first half of 2015, the carriers are relying more heavily on less profitable domestic routes these days. As a result, even Aeroflot reported a net loss of 3.5 billion roubles ($54.4 million) for the first six months of this year. By comparison, that figure stood at just 1.9 billion roubles ($28.3 million) during the same period last year. 

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