By Gleb Stolyarov



FILE PHOTO: The logo of Russia's flagship airline Aeroflot is seen on an Airbus A320 which landed after an inaugural trip at the Marseille-Provence airport in Marignane


© Reuters/JEAN-PAUL PELISSIER
FILE PHOTO: The logo of Russia’s flagship airline Aeroflot is seen on an Airbus A320 which landed after an inaugural trip at the Marseille-Provence airport in Marignane


MOSCOW (Reuters) – Aeroflot said on Friday the state would take up 50 billion roubles worth of its 80-billion rouble ($1 billion) new share offering, a vital cash injection for Russia’s flagship airline that is reeling from the pandemic.

Russia grounded flights abroad in April and has only resumed some routes, cutting revenue streams in half for Russia’s airlines that are also grappling with a plunge in the rouble. Some airlines will need state support to survive, analysts say.

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Aeroflot is holding a secondary public offering in Moscow to be completed around Oct. 26 and has raised 39.1 billion roubles during bookbuilding, including 9.1 billion roubles from the Russian state, the airline said.

The Russian government, which already holds a 51.17% stake in Aeroflot, will also exercise pre-emptive rights to buy a further 40.9 billion roubles in shares, Aeroflot said. Market investors will buy shares worth 30 billion roubles, it added.

Aeroflot’s board was reported to have set the share price at 60 roubles, prompting its share price to fall 8.8% from 65.86 roubles on Wednesday to 60.08 roubles on Friday.

Russia’s Direct Investment Fund said it and leading sovereign wealth funds from the Middle East had become anchor investors in the SPO.

Finance Minister Anton Siluanov said the government’s funds would be taken from Russia’s National Wealth Fund, a separate entity from the RDIF. They are the first state cash injection to a Russian company during the pandemic, which has hit national airlines hard.

Russia’s total airline passenger traffic fell 35% in August year on year. That represented a significant recovery from previous months

AirAsia Aircraft at Kuala Lumpur Airport Ahead of Earnings

Photographer: Samsul Said/Bloomberg

AirAsia X Bhd.’s restructuring plan was met with bleak forecasts and ratings from analysts as well as a 10% drop in its share price, underscoring the daunting challenges that lie ahead for the grounded carrier.

Public Investment Bank Bhd. maintained its underperform rating and 1 sen price target on the airline, the long-haul arm of AirAsia Group Bhd. Max Koh, an analyst at KAF Equities Sdn Bhd., kept his sell rating and 0.02 sen target, saying he was neutral on the restructuring proposals “given the grim outlook.” AirAsia X’s shares headed for their biggest loss since Aug. 3.

AirAsia, AirAsia X underperforming a gauge of Asia-Pacific airline stocks

The airline said Tuesday the plan, which it expects to complete by the end of next quarter, would wipe out almost 63.5 billion ringgit ($15.3 billion) in debt and save it from collapse as the coronavirus pandemic continues to wreak havoc on travel. The proposal requires approval from investors and creditors. Advance ticket payments will be converted into travel credits for customers.

AirAsia X said it hopes to begin operating with two aircraft in selected markets in the first quarter next year and gradually resume flights to all destinations by the end of 2021. The carrier said it would focus on flights within the five- to six-hour range and defer investment in new or immature routes.

Here’s what some analysts said about AirAsia X’s restructuring plan:

KAF’s Koh (Sell; target 0.02 sen)

  • This is a “hard reset” for AirAsia X to remain a going concern
  • Neutral on plans to operate with a leaner and lower cost structure and 500-million ringgit fundraising exercise as the airline will need approvals from creditors and shareholders to succeed
  • The aviation industry’s outlook is grim due to the Covid-19 pandemic
  • Fresh equity injection from shareholders should accompany AirAsia X