Банкеръ Weekly

Briefs

BALKAN AIRLINES WAS TAPPED WITH ZACHARY ZHELIAZKOV'S FAVOUR

Balkan Airlines was tapped, while the state was aware of that, with the favour of Zachary Zheliazkov, the former PA Executive Director. This is the conclusion which any unbiased reader of the curator's report would arrive at. The report written by the two curators Ralitsa Topchieva and Vladimir Petkov was presented at the General Assembly of the creditors, which took place at the beginning of April, and was submitted to the Sixth Commercial Department of the Sofia City Court.
In the beginning of 2000 the post-privatisation control, headed by Zheliazkov, received ample information to start closely monitoring the activities of Zeevi Holdings - the new Balkan Airlines majority owner. But Zeevi Holdings was left undisturbed instead.
Besides tapping the company revenues and returning them as credits, as well as the direct launching of credits to Zeevi Holdings by the state (detailed information in the Banker weekly issue 14 of April 7, 2001), there are numerous proofs of the obvious robbing of the Balkan Airlines in the 1999 PL account and the balance sheet. In the beginning of April 2000 all these documents were submitted to the PA. According to them the total 1999 income from the main activities has dropped by BGL51.244MN compared to 1998 - the last year when Balkan Airlines operated as a state owned company. More than BGL47MN of the decrease was a result of the shrinked income from sales.
At the same time the documents show double increase of the company's extraordinary expences - from BGL7.470MN in 1998 to BGL14.242MN in 1999. As a whole, in 1999 Balkan Airlines reported a year end loss of BGL19.961MN, which is an increase of BGL10.586MN compared to 1998.
The carrier's total liabilities increased from BGL197.207MN to BGL201.286MN. The biggest increase is that of the liabilities for loans received - from BGL36.021MN in 1998 to BGL50.656MN in 1999. Liabilities to suppliers increased by BGL10.4MN and in the end of 1999 they amount to BGL96.809MN.
In their report the two curators have emphasised the downgrading tendencies in the company development for the twelve months. The most negative fact in the main activities, according to them, is the loss of BGL20.111MN reported by the carrier, compared to the 1998 profit of BGL1.454MN. All these negative tendencies in the development of the bulgarian flag carrier however have attracted neither Zachary Zheliazkov's attention, nor the attention of his subordinates. Naturally, as the state was not reacting, Gad Zeevi's people continued working in the same direction, but with a well set purpose and thoroughness.
So the 2000 results showed the way Balkan Airlines was reduced from an operating national flag carrier to a hollow shell. Income from sales dropped abruptly by BGL10.391MN compared even to the negative 1999 results. Total income reduction is even greater - by BGL61.574MN compared to 1998 and BGL18.636MN compared to 1999. In the meantime company expenses surged drastically upwards, by BGL29MN. As a whole the company losses tripled - from BGL19.961MN in 1999 to BGL67.569MN in 2000.

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