Банкеръ Weekly



At its regular weekly session on Thursday (July 10) the Government surprisingly changed the strategy for the divestment of the national air carrier and offered 100% of Bulgaria Air EAD to a strategic investor. The initial intention to put up for sale 51% of the company's capital and list 25% of the balance on the stock exchange were replaced by the idea for getting a better price.It will be no use to privatize only 51% because the price of the residual minority stake won't be sufficiently advanatgeous to the seller, the Finance Minister Milen Velchev explained. The idea to trade shares of Bulgaria Air on the stock exchange was dropped for the same reason. The Deputy Executive Director of the Privatisation Agency (PA) Stanislav Ananiev explained the airline's paper will be offered for sale through a publicly announced tender, including a preliminary and conclusive stage. In the first stage the PA will certify the applicants, admitted for participation. They can be both natural and juristic persons. The candidates that are strategic investors are required to have received more than EUR100MN in proceeds from civil aviation for each of the last three fiscal years. And financial investors will have to prove they have managed a fund of EUR200MN-plus.The new divestment strategy projects that the PA should set a requirement that 51% of the investor's shares should be held by a Bulgarian natural or juristic person, Mr. Ananiev specified. The violation of that conditions could result in revocation of the aviation operator's licence. In the words of the Finance Minister, this in connected with the requirements of international agreements between Bulgaria and the countries to which Balkan Air flies. Some time ago the Minister of Transport and Telecommunications Plamen Petrov commented that Bulgaria will demand a two-phase transitional period till the year 2005 before signing the Multilateral Agreement for the Establishment of a Common European Aviation Space. The divestment deal will be consulted by a consortium between Deloitte Touche and Central Cooperative Bank, with which the PA signed a contract on April 21, 2003. Investors which have filed preliminary offers will be ranked according to the following criteria: bidding price, size of projected investments and proposed number of working positions. The document explicitly states it is important that the State keeps its right of a veto if the buyer decides to change the subject of the company's activity, its head office, intends to undertake its liquidation, etc. In the beginning of April the Transport Ministry proposed to four private airlines to consolidate under the umbrella of Bulgaria Air prior its privatisation, swapping their aircraft and activities for shares in the national carrier. However, Bulgarian Air Charter, Hemus Air, Air Sofia, and BHR rejected the invitation with the motive that they did not think it would be reasonable to merge into a company without any assets, just to be sold to a foreign investor afterwards.
In the second half of April Bulgaria Air was the top seller of tickets according to official data of IATA BSP Bulgaria (in February the airline was second after the No1 seller Lufthansa).Presently, Bulgaria Air is servicing 12 destinations. In the beginning of May the company launched flights to Lisboa and Amsterdam, and regular flights to Russia started as of June 1.Since the beginning of 2003 Bulgaria Air has carried 18% more passengers than projected in its business plan. The airline expects a profit of about USD500,000 from the charter flights alone, almost 41% up from the planned earnings from the summertime programme. A total of 339 flights have been projected in the company's charter schedule. Revenues from charter flights amount to USD7,727,795.

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