Russia offloads 25% of Aeroflot amid crushing sanctions losses
Photo: An Aeroflot aircraft (Getty Images)
Russia is preparing to sell nearly 24% of its shares in Aeroflot. This deal will result in massive losses for the Russian budget, according to the Foreign Intelligence Service of Ukraine.
The Federal Agency for State Property Management of Russia has begun preparations to sell 23.76% of the airline’s shares and has already announced the selection of a transaction organizer. The future intermediary is to assess the market value of the stake and propose a mechanism for its sale.
It is expected that after the deal is completed, the state will retain control over the company. However, its stake will be significantly reduced—from 73.8% to about 50%.
Financial losses for Russia
The deal highlights the financial problems of the Russian economy, as the stake must be sold at a significant loss.
In 2020, the Russian Ministry of Finance purchased these shares using funds from the National Welfare Fund at $0.84 per share. Currently, their market value has fallen to about $0.66. Under these conditions, the sale of over 944 million shares will result in losses of approximately $170 million for Russia.
Due to strict international sanctions, Russia’s civil aviation industry is in crisis. Airlines are facing a shortage of spare parts, rapid aging of their fleets, and rising maintenance costs.
These conditions significantly reduce the asset’s appeal. According to experts, the main contenders for Aeroflot shares could be domestic Russian state banks, business groups close to the government, or individual investors from Asia and the Middle East.
This indicates Moscow’s extremely limited ability to attract international capital.
The day before, the United Kingdom announced new cryptocurrency sanctions against Russia. The sanctions list includes 18 financial institutions, banks, and cryptocurrency platforms.
The Council of the European Union has extended sanctions against Russia for human rights violations for another year. The restrictions remain in place for 72 individuals and one legal entity.
