Aftermath of Minsk incident puts Belarusian airline on the brink

By Gleb Stolyarov and Tom Balmforth

MOSCOW, May 28 (Reuters) – The international response to the grounding of a Ryanair plane in Belarus and the arrest of a dissident on the flight has dealt a blow to state-owned airline Belavia and its plans expansion.

Just last month, Belavia took delivery of a new Boeing 737 MAX as part of its strategy to offer more transit flights through the Belarusian capital Minsk.

Since the forced landing of Sunday’s flight in Minsk, most of Belarus’s neighbors and many other European countries have banned its flights. The EU has offered to close its airspace in Belavia and prevent it from landing at EU airports.

A Belavia plane to Barcelona on Thursday was unable to leave Belarus because France had banned Belarusian flights over its territory.

Belavia is the only airline in the former Soviet economy of 9.5 million people. He was emerging bruised but ambitious from a COVID-19 pandemic that reduced passenger traffic last year to 1.7 million people, down more than 58% from 2019.

This month, he reported a net loss of 92 million rubles ($ 36 million) in 2020, compared with a profit of 68.3 million rubles in 2019, but said he was guaranteeing further demand from the share of people traveling to and from Europe via Minsk. He listed the routes from Vilnius to Amsterdam, Frankfurt, Paris and London.

All of these roads are now closed.

Belavia says it has been banned from flying to Lithuania, Latvia, Poland, Czech Republic, France, Sweden, Finland, Austria, Italy, Spain, Germany, Belgium, the Netherlands and the United Kingdom. The list could go on.

Ukraine announced on Friday that it would ban Belarusian aviation from its airspace.

The Belarusian capital has become a popular transit stop for Ukrainians and Russians traveling between their countries since direct flights were banned after their relations plunged into acrimony in 2014.

LARGE DEBT

Belavia has accumulated significant debts when building its fleet of 30 aircraft, half of which are leased.

At the end of last year, Belavia reported total debt of around $ 400 million, including leasing obligations of over $ 220 million. Part of these obligations lie with Air Lease Corporation (ALC), which signed a contract in July 2018 for five Boeing 737 MAXs.

ALC was not immediately available for comment.

“The company is going through a very difficult time,” Oleg Panteleev, director of the Russian aeronautical analysis agency Aviaport, said of Belavia.

Belavia, which was founded in 1996 two years after authoritarian President Alexander Lukashenko came to power, employed 2,100 people at the end of 2020.

The carrier will almost certainly have to cut costs on a large scale, including its staff and fleet, Panteleev said.

“On the other hand, Belarus will not give up its national airline,” he said, suggesting that the government could intervene with its support.

Belavia said on Wednesday that there were no plans for massive layoffs, but he acknowledged that cost cuts and “optimization” of the workforce are unpleasant but necessary steps.

The head of Belavia has exchanged emails about the Minsk incident with the international aviation body IATA, of which Belavia is a member.

“No one has suggested that they (Belavia) were involved in any way,” IATA chief executive Willie Walsh told Reuters.

“I made it clear that we condemn what the Belarusian government has done. For the hardworking airline workers, I think you must have sympathy because they did nothing, but they are suffering as a result.”

(Reporting by Gleb Stolyarov Additional reporting by Tim Hepher Written by Tom Balmforth Editing by David Goodman)


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