State to account for most of Aeroflot $1bn recapitalisation

The Russian state has pledged to participate in an Aeroflot Group share offering, injecting RUB50 billion rubles (USD649 million) of the total RUB80 billion (USD1 billion) recapitalisation, the company said in a stock market disclosure on October 9. The flag carrier is staging a secondary public offering, which will be completed on or around October 26. It said it had raised RUB39.1 billion (USD508 million) through a bookbuilding process – which records investor demand for shares – including RUB9.1 billion (USD118 million) from the Russian state. The Russian government currently holds a 51.17% stake in Aeroflot, and it will exercise pre-emptive rights to buy a further RUB40.9 billion (USD531 million) in shares, the filing explained. The funds will come from the Russian National Wealth Fund, the country’s finance minister, Anton Siluanov, has said. Vitaly Saveliev, Aeroflot’s chief executive, commented in the disclosure that “the warm response” from investors during a virtual roadshow in the run-up to the offering showed that “both existing and new investors recognise the significant long-term growth potential of the Russian passenger aviation market as well as Aeroflot Group’s unique ability to capitalise on this structural growth opportunity.” Aeroflot (SU, Moscow Sheremetyevo) – including subsidiaries Aurora, Pobeda, and Rossiya – in August disclosed an 85% plunge in second-quarter revenue. Adding to its woes is the fact that the rouble has fallen 25% against the US dollar this year, increasing maintenance costs. Although majority-owned by the Russian government, Aeroflot is also listed on the Moscow Exchange with 40.9% of all shares in free float.