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Airlines

Name: S7 AIRLINES
7JetSet7 Code: SBR
Status: Operational
Region: CIS
City: NOVOSIBIRSK
Country: RUSSIA
Employees 5860
Web: s7.ru
Email: s7@s7.ru
Telephone: +7 495 540 4770
Fax: +7 495 540 4780
Sita: OVBDMS7
Background
(definitions)

Click below for data links:
SBR-2002-RANKINGS
SBR-2003-08-A
SBR-2003-08-B
SBR-2003-08-C
SBR-2003-08-D
SBR-2004-01 STATS 2003
SBR-2004-02-NEWS
SBR-2004-07
SBR-2004-07-A
SBR-2004-07-B
SBR-2004-08-ACCDT-A
SBR-2004-08-ACCDT-B
SBR-2004-09
SBR-2004-09-A
SBR-2004-09-B
SBR-2004-11
SBR-2004-12
SBR-2005-03-A
SBR-2005-04-A
SBR-2005-05-A
SBR-2005-05-B
SBR-2005-07-A
SBR-2005-08-A
SBR-2006-01-A
SBR-2006-06
SBR-2006-07-ACCDT
SBR-2007-STATS
SBR-2008-03-PLANS
SBR-2013-05 - NOVOSIBIRSK AIRLINES
SBR-2013-05 - NOVOSIBIRSK AIRPORT
SBR-2014-01 - DME AIRPORT EXPANSION
SBR-2015-07 - Top 12 at Domodedovo.jpg
SBR-2015-07 - Top 12 S7 Routes at DMV.jpg
SBR-LOGO

ESTABLISHED AND STARTED OPERATIONS IN 1992. FORMER AEROFLOT (ARO) DIVISION, PARENT COMPANY OF NOVOSIBIRSK AIRLINES. A K A AIR SIBIR, SIBERIAN AIRLINES, SIBAVIA, SIBAVIA SIBIRSKIR AVIALINII KONTSERN, FORMERLY SIBIR AVIA KOMPANII. SCHEDULED & CHARTER, DOMESTIC AND INTERNATIONAL, PASSENGER & CARGO, JET AIRPLANE SERVICES.

ADDRESS:
2/2 PAVELETZKAYA SQUARE
FLOORS 23, 17, 7
MOSCOW 115054, RUSSIA

Russia (Russian Federation) was established in 1991, it covers an area of 17,075,400 sq km, its population is 148.4 million, its capital city is Moscow, and its official language is Russian.

SEPTEMBER 1995: ONE OF RUSSIA'S SEVEN LARGEST OPERATORS.

REGIONAL CHARTER SERVICES TO EUROPE AND ASIA.

MAINTENANCE BASE IS AT TOLMACHEVO AIRPORT, NOVOSIBIRSK.

HAPAG LLOYD (HAP), WAS ASKED TO DO MAINTENANCE FOR A 757 OF SIBIR AIRLINES (SBR), FOR A GERMAN COMPANY, OPERATING FOR AND WITH SIBIRIAN AIRLINES (SBR), ESTABLISHED TOGETHER WITH OLYMPIC TRAVEL, GERMANY, TO FLY PASSENGERS (PAX) OF GERMAN ANCESTRY TO HANNOVER. THE 757 HAS BEEN LEASED FROM BELGIUM.

NOVEMBER 1997: SCHEDULED SERVICES TO HANOVER (TU-154M, 132 PAX). TO TASHKENT LINKING UZBEK CAPITAL WITH TOMSK, BARNAUL, AND OTHER SIBERIAN DESTINATIONS.

APRIL 1998: CONTRACT TO UK CONSULTING FIRM, ATLAS PROJECT MANAGEMENT, TO AID IN MODERNIZING MANAGEMENT, OPERATIONS & MARKETING.

2,040 EMPLOYEES.

SIBIR AIRLINES (SBR) IS THE 7TH LARGEST AIRLINE IN RUSSIA.

(SBR) WANTS TO BE A LEADER IN THE DOMESTIC MARKET WITH COOPERATION OF THE NOVOSIBIRSK REGIONAL ADMINISTRATION, EXPECTING TO SATISFY 60% OF REGIONAL NEEDS, FLYING 30 AIRPLANES.

NEW ROUTES TO DUSHANBE, NORILSK, MIRNY, ODESSA, AND SIMFEROPOL.

1997 = 645,000 PASSENGERS (PAX).

IL-86'S USED ON SOME ROUTES, BUT MOST WILL USE TU-154'S. HAS A
LARGE MAINTENANCE BASE TO SERVICE VARIOUS AIRPLANE TYPES.

SEPTEMBER 1998: EXCHANGES 1 TU-154M (91A880) FOR (90A866) TO LEASE TO IRAN AIR TOURS (IRN).

NOVEMBER 1998: 2 AN-38'S (3801001; 3801003) DELIVERIES.

APRIL 1999: 1998 = 620,000 PASSENGERS (PAX) (+3%), 5,800 TONS CARGO (+5%); 76% LF (LOAD FACTOR).

BOUGHT 2 TU-154M'S IN 1998, & FITTED NEW CABINS IN 26 TU-154'S & IL-86'S.

AUGUST 1999: VLADISLAV FILIOV, GENERAL DIRECTOR SPENT 6 WEEKS AT VNUKOVO, EVALUATING POSSIBLE MERGER. SIBIR AIRLINES (SBR) BROKE EVEN IN 1998. THE TWO OPERATORS MAY EXPERIMENT WITH "JOINT OPERATION."

DECEMBER 1999: AFTER FAILING TO SECURE FINANCING FOR UP TO 5 737'S LEASED, NOW HAS SERIOUS NEGOTIATIONS WITH GORBONUV AVIATION PLANT, KAZAN, RE-3 TU-214 (PS-90), AVIALEASING (PERM) LEASED IN 2000. IN INTERIM, WILL LEASE 1 TU-204-100, FOR NOVOSIBIRSK - MOSCOW.

FEBRUARY 2000: RESUMES SERVICE TO SEOUL (TU-154/IL-86).

1 IL-86 (51483208071, RA-86103), AEROFLOT (ARO) LEASED.

APRIL 2000: MOSCOW - MUNICH (2/WEEK). CHARTER FLIGHTS IN SUMMER TO
ANTALYA, BURGAS, LARNACA, AND VIENNA, + MOSCOW TO ANTALYA, LARNACA, & PALMA DE MALLORCA.

2,300 EMPLOYEES (INCLUDING 500 FLIGHT CREW (FC), 300 CABIN ATTENDANTS (CA), & 500 MAINTENANCE TECHNICIANS (MT).

SITA: OVBDMS7.

(media@s7.ru).

PLANS TO ESTABLISH A HUB AT MOSCOW'S VNUKOVO AIRPORT, WHILE EXPANDING ITS NETWORK OF SUBSIDIARIES IN SIBERIA, AND RUSSIA'S FAR EAST. COULD BECOME RUSSIA'S #2 CARRIER AFTER AEROFLOT (ARO), AND LEAPFROG PRESENT STRUGGLING #2, VNUKOVO (VNU).

1999 = 744,000 PASSENGERS (PAX) (+20%). PROJECTS 1.5 MILLION PASSENGERS FOR 2000. 70.1% LF (LOAD FACTOR).

WILL CONSOLIDATE OPERATIONS AT ITS NOVOSIBIRSK TOLMACHEVO BASE, BUT BESIDES BUILDING AT VNUKOVO, IT ALSO PLANS TO EXPAND OPERATIONS FROM PERM IN THE URALS AND EXPAND ITS EASTERN OFFSHOOTS. SUBSIDIARIES IN BARNAUL, KEMEROVO, AND TOMSK, ALREADY CREATE 30% OF TURNOVER.

TAKES OVER SIANI (OPERATOR), AND ROUTES TO BRATSK, CHITA, & IRKUTSK.

1 TU-204-120 (145743164017, RA-64017), PERM LEASED.

JUNE 2000: CONCLUDES PASSENGER (PAX) THROUGH-FARE, & INTERLINE AGREEMENT WITH LUFTHANSA (DLH). HAS HAD AN EXISTING CARGO ACCORD SINCE 1998.

JULY 2000: OMSK - MOSCOW (VNUKOVO) (DAILY) AND OMSK - FRANKFURT
(WEEKLY).

1999 = +$2 MILLION (NET PROFIT): 2.38 BILLION (RPK) TRAFFIC (+20.4%); 28.8 MILLION (FTK) FREIGHT TRAFFIC; 745,000 PASSENGERS (PAX), 2,385 EMPLOYEES.

SEPTEMBER 2000: 1ST 8 MONTHS = 531,300 PAX (+4.1%), 68.3% LF, CARGO & MAIL 5,257 TONNES (+3.3%).

IL-86 (51483210093, RA-86125) TO EAST LINE (ESL). 1 TU-134A-3 (35220, RA-65881), EX-VORONEZH (VOR).

NOVEMBER 2001: TU-134A (60035, RA-65563) RETURNED TO NAPO.

DECEMBER 2000: AN-24B (RA-47185) TO NOVOSIBIRSK AIRLINES.

JANUARY 2001: PLANS TO ACQUIRE VNUKOVO AIRLINES (VNU), TO FORM THE 2ND LARGEST AIRLINE IN RUSSIA. WOULD ADD 17 IL-86'S, 24 TU-154'S, & 7 TU-204'S AND INCREASE NETWORK BY 50 CITIES TO 200.

PROJECTS 2000 = +$5 - 6 MILLION: 832,000 PASSENGERS (PAX) (+12%).

1 TU-204 (1450743164011, RA-64011), EX-VNUKOVO AIRLINES (VNU).

APRIL 2001: POSSIBLE MERGER WITH AEROFLOT (ARO).

SIBIR AIRLINES (SBR) HAS 90% OF DOMESTIC MARKET. IN 2000 = 2.1 MILLION PASSENGERS (PAX), WHEREAS AEROFLOT (ARO) IN 2000 CARRIED 5.9 MILLION PAX.

2,385 EMPLOYEES (INCLUDING 500 FLIGHT CREW (FC), 300 CABIN ATTENDANTS (CA), & 500 MAINTENANCE TECHNICIANS (MT).

MAIN BASE: NOVOSIBIRSK (TOLMACHEVO) AIRPORT.

HUBS: MOSCOW (VNUKOVO); AND IRKUTSK (IKT).

JUNE 2001: PLANS SERVICE TO LONDON.

AUGUST 2001: 1ST 6 MONTHS = 1.70 BILLION RPK (TRAFFIC), 545,000 PASSENGERS (PAX) (+74.2%).

1 TU-154M (84A-705, RA-85610) TO VNUKOVO AIRLINES (VNU). 2 TU-154M'S (86A-739, RA-85620, NEW; 90A-861, RA-85690; RETURNED FROM DAALLO AIRLINES (DAO). 2 IL-86'S (51483206052, RA-86081; 51483206060, RA-86089), DELIVERIES. 2 IL-86'S (51483207070, RA-86102; 51483208080, RA-86112), WITHDRAWN FROM USE (WFU).

OCTOBER 2001: ACCDT: TU-154M (90A-866, RA-85693) CHARTER FLIGHT FROM TEL AVIV TO NOVOSIBIRSK, CRASHED EN ROUTE INTO THE BLACK SEA, 114 MILES OFF COAST NEAR ADLER, A RUSSIAN COASTAL TOWN, ON THE GEORGIAN BORDER = ALL 11/66 FATALITIES. CONFIRMED AS BEING HIT BY AN ACCIDENTAL FIRING OF A GROUND-TO-AIR MISSILE FROM UKRAINE.

2 TU-154M (87A-761, RA-85632; 90A-834, RA-85674), EX-(VNU). 4 TU-154M (86A-738, RA-85619; 87A-749, RA-85623; 87A-750, RA-85624; 92A-926, RA-85743) TO VNUKOVO AIRLINES (VNU).

JANUARY 2002: 2 TU-154B'S (75A-115, RA-85115; 76A-135, RA-85135), WITHDRAWN FROM USE (WFU).

FEBRUARY 2002: 2001 = 1.92 MILLION PASSENGERS (PAX) (+130%), INCLUDING 513,000 (27%) PAX FLOWN BY MERGER PARTNER VNUKOVO AIRLINES (VNU). 14,086 TONNES CARGO (+56.6%).

IN JUNE, BARNAUL - FRANKFURT (TU-154M/TU-204, 2/WEEK).

APRIL 2002: 4,058 EMPLOYEES (INCLUDING 700 FLIGHT CREW (FC), 618 CABIN ATTENDANTS (CA), & 683 MAINTENANCE TECHNICIANS (MT)).

SITA: OVBDMS7. (http://www.s7.ru).

(Telephone: +7 (3832) 599011). (FAX: +7 (3832) 599064).

May 2002: Moscow (Domodedovo) - Kiev (Tu-154M). Has moved all of its Moscow operations to the modernized, Domodedovo Airport, from cross-town rival, Vnukovo Airport. Sibir Airlines (SBR) currently has approximately 140 flights/week from Moscow.

July 2002: 2001 = -$1.8 Million.

October 2002: Acquires Armavia (ARZ), who will operate several A320's, instead of its sole Tu-134A. As well as maintaining service between Yerevan, Istanbul, and Moscow, (ARZ) plans to fly to Paris, and Los Angeles. Because of Russia's 40% taxes on imported airplanes, Sibir Airlines (SBR) is unable to operate western airplanes domestically, although it hopes the government will lessen or remove these unreasonable tariffs.

1 Tu-154B2 (81A-471, RA-85471) delivery.

December 2002: Sberbank, the Russian savings bank, believed to be the largest bank in Russia, made the 1st loan for a new-generation Russian-made airplane, when it advanced $17.7 Million to (SBR) for the purchase of a Tu-204.

A320-211 (229), (AWW) leased for subsidiary, Armavia (ARZ) operations.

January 2003: 2002 = 2.7 Million passengers (PAX) (+41%), in part due to its merger with Moscow-based Vnukovo Airlines (VNU).

February 2003: Plans to establish a subsidiary in Germany to operate A320's.

April 2003: 4,058 employees (including 700 (FC) Flight Crew, 618 (CA) Cabin Attendants, & 683 (MT) Maintenance Technicians).

June 2003: 5,860 employees. (http://www.sibir.ru).

July 2003: 1st 6 months = 1.28 Million passengers (PAX) (+18%); +13% (FTK) traffic.

Resumes Novosibirsk - Shenyang. Also Novosibirsk - Dalian.

September 2003: 2002 = +RBL 56 Millionj/+$1.8 Million (net profit): 7.48 Billion (RPK) traffic (+71.9%); +72% (ASK) capacity; 73.1% LF (load factor); 2.7 Million passengers (PAX) (+40%); 56 Million (FTK) freight traffic (+51.6%); 4,515 employees (+11.3%).

2002 TOP WORLD AIRLINES PASSENGER TRAFFIC (RPK) (BILLION):
82 (HNA) 7.93; 83 (IND) 7.55; 84 (OLY) 7.55; 85 (ACH) 7.50; 86 (SBR) 7.48; 87 (MTH) 7.09; 88 (KUW) 6.71; 89 (VIE) 6.60; 90 (SPR) 6.57; 91 (BMA) 6.56; 92 (LNK) 6.41; 93 (RAM) 6.38; 94 (BTA) 6.36; 95 (QTA) 6.20; 96 (COI) 5.96; 97 (EGF) 5.94; 98 (LOT) 5.87; 99 (FRO) 5.49; 100 (WJI) 5.49.

January 2004: 2003 = +$900,000 (+$480,000): 9.25 Billion (RPK) (+20.7%); 79.4% LF; 3.4 Million (PAX) (+26.1%); 63.44 (FTK) (+8.2%).

In July, Moscow (Domodedovo) - Leipzig/Halle (Tu-154M, weekly).

February 2004: Air Transport World awards Sibir Airlines (SBR) with 2004 "Airline Market Leadership."

2 Tu-134A-3's (48540, RA-65033; 4352205, RA-65615), 1 Tu-154B-2 (81A-471, /81 RA-85471) & 1 Yak-40 (9730655, RA-87916) deliveries.

April 2004: Will receive $25 Million long-term loan from International Finance Corporation (IFC) to refinance existing short- and medium-term loans for acquisition and refurbishment of airplanes, to increase working capital and for route expansion. (IFC) is a member of the World Bank Group and the largest multilateral source of loan and equity financing for private sector projects in the developing world.

May 2004: 4,515 employees.

(info@s7.ru).

Moscow (DME) - Bratsk (Tu-154M, 2/week). Next month, Moscow (DME) - Volograd (Tu-154M, daily). Moscow to Dubai, Sharm el Sheikh (5/week), Antalya, & Rostov-on-Don (5/week), and Stavropol (4/week), all with TU-154M's. Norilsk - Krasnodar; - Sochi; Novosibirsk - Baku (weekly); - Chita; - Bishkek. Moscow - Volgograd (daily). Norilsk - Novosibirsk (weekly). In June, Novosibirsk - Blagoveshchensk. In July, Moscow Domodedovo - Cheyabinsk; - Stuttgart (2/week); Kemerovo - Hannover; Novosibirsk - Munich; Irkutsk - Niigata (weekly)); Barnaul - Munich; Omsk - Munich.

1st Quarter = +26.2% passengers (PAX).

1st 2 A310-304's (442, F-OGYP; 453, F-OGYQ) deliveries.

June 2004: To take a 53% stake in Enkor by the end of 2004.

Plans to adopt a livery with bright and dark greens, bright red balls, and silhouettes of people "appearing very much at ease." The wings will stay white underneath, and the same "Sibir" will be painted on the side in cherry red. Next to the airline's name and on the tail, is "S7" (the airlines (IATA) designator) which will appear inside a circle that is also cherry red. The airline says "There is so much drab and gray in the country and we would like to bring people a sensation of celebrating. Seats will be purple up front and bright blue at the back. London-based Landor Associates created the design, which requires final approval from the (SBR) board. The company is also thinking about changing its name after a transitional period.

Tu-154M (757, RA-85628) to Vnukovo Airlines (VNU).

July 2004: Barnaul - Antalya (Tu-154, weekly). Moscow - Niznevartocsk - Moscow rotation (A310-304, 12C, 193Y). Leipzig - Moscow Domodedovo (Tu-154, weekly Sats).

50/10 orders (September 2007) Sukhoi RRJ-95's.

August 2004: 1st 6 months = Aeroflot (ARO) 3.1 Million PAX (+.3%); Sibir (SBR) 1.5 Million (+17.1%); KrasAir (ZXD) 765,000 (+46.6%); UTair (TYU) 634K (+9.3%); Transaero (TRX) 607,000 (+124%).

Contract with Lufthansa (DLH) Systems' Flight Management System database for its fleet of A310's.

ACCDT: TU-154B-2 (556, RA-85556) crashed near Rostov = all 8/38 fatalities. Terrorism confirmed (by Russian President Vladimir Putin) as the cause after traces of a plastic explosive called hexogen had been found in the wreckage.

December 2004: Tu-154M (97A-1009, RA-85828) delivery.

January 2005: A310-304 (475), ex-Aeroflot (ARO), (GEF) leased. Tu-154M (906), delivery. TU-154M (1009, RA-85828), ex-Daghestan Airlines.

March 2005: 3rd A310 delivery. Will lease +2 wet-leased by end of year.

May 2005: 5 737-522's (26672, VP-BSQ; 26675, VP-BSU; 26692, VP-BSV; 26695, VP-BSW; 26699, VP-BSX), ex-United Airlines (UAL), GECAS (GEH) leased. A310-204 (430, VP-BSY), delivery.

June 2005: 4,000 employees (-19.2%).

A310-204 (468, VP-BSZ), delivery.

August 2005: 5-year Total Component Support contract from Lufthansa Technik (DLH) (LTK) for 8 A310's.

October 2005: 3 737-522's (25001, VP-BTD; 25008, VP-BTE; 25387, VP-BTI), ex-United Airlines (UAL), Aircastle leased deliveries.

November 2005: AiRUnion, the alliance of Russian airlines under a single management company, wants to move toward a full merger in 2006, an official said in Moscow. Members of the group are Krasair (ZXD), Domodedovo Airlines (DOD), Omskavia (OMK), Samara Airlines (SMR) and Sibaviatrans. Should the combination take place, the resulting carrier will surpass Sibir (SBR) to become the second-largest in Russia in terms of passengers. AiRUnion currently operates about 100 airplanes and has begun taking delivery of 10 737-200s, VP-Sales and Marketing/International Affairs Urs Herzig said. "Besides that, we will also be looking for new Russian airplanes like the Il-96 and Tu-204s and Tu-214s," he said. AiRUnion also operates four 767s and wants to build its fleet around Western airplanes. Next summer, it will open four routes to China. In addition to other destinations in the Far East, it is looking for flights to the USA. So far, no more information has been given about future passenger figures or financial details. The company possibly is interested in participating in the privatization of Malev (HGA) when the process is restarted; "Malev (HGA) would fit well with our needs," Herzig said.

Sibir Airlines (SBR) is working toward a goal of having an all-Western fleet by 2008. It currently operates seven 737-500s and five A310-200s as well as 30 Tu-154Ms and nine Il-86s. Next year it hopes to operate 15 - 20 Western-made airplanes, possibly including some 737-300s. A sixth A310 could join the fleet by year end. It intends to phase out two relatively new Tu-204s that have not lived up to efficiency expectations. Sibir Airlines (SBR), the second-largest Russian airline, holds a 14% share of the Russian aviation market, rising to 20% for domestic operations. In addition to its bases at Novosibirsk and Irkutsk, Moscow Domodedovo Airport (DME) has become its major hub. Growth has slowed from a rate of approximately 30% annually over the past few years to around 10% - 15% today. The carrier will transport around 4 million passengers this year, which should increase to 5 million in 2006. A majority of Sibir Airlines (SBR) ownership rests in private hands with the government holding 25%. The airline is expecting revenue of $660 million for 2005 and is flying around 120 routes to destinations in Europe, the Middle East, North Africa and the Far East. It has 55 interline agreements and plans to change its name to "S7" (its (IATA) code). It had no comment on reports that Lufthansa (DLH) has offered to become a shareholder.

Moscow Domodedovo Airport (DME) plans to invest $500 million over the next five years to continue its dynamic growth and become a major transfer point between East and West. "Our goal is to have all quality carriers which serve Moscow here at Domodedovo Airport (DME)," Director-Business Development, Daniel Burkard said. The addition of Thai Airways (TII) on November 1 means that the airport is served by 15 foreign airlines, up from just one in 2001.

Domodedovo Airport (DME), which is celebrating its 40th anniversary, will become Moscow's busiest airport this year with a 47% share of passenger traffic. Sheremetyevo will fall to No 2 with a 41% share, with Vnukovo bringing up the rear at 12%.

With Aeroflot (ARO) invited to join the SkyTeam (STM) Alliance, Burkard believes the search by major alliances for other Russian partner airlines will accelerate and (DME) plans to cooperate wherever it can. "If an alliance, such as Star (SAL), decides to come to (DME) and needs more space, we are able to offer that we would build a separate terminal for them," he said.

From January to September, 10.7 million passengers used Domodedovo Airport (DME). For the full year, Burkard expects at least 13.6 million, ranking it No 18 among European airports. Management believes that by 2010 some 24 million passengers will use it. Currently, traffic is split 45% domestic and 55% international. Around 30% of users are transfer passengers.

The airport is weighing seeking foreign investors or an Initial Public Offering (IPO) to raise development funding estimated at $120 - $150 million per year. Priority projects include doubling the size of the passenger terminal, extending parking facilities and certifying all runways in accordance with (ICAO) Category III requirements. Nevertheless, until 2013 capacity of the current two runways should be enough to handle increased traffic, Burkard said.

737-522 (25009, VP-BTF), ex-United Airlines (UAL), Aircastle (CSL) leased.

February 2006: Siberia Airlines (SBR) inaugurated nonstop service from Moscow's Domodedovo Airport to Samara (Russia). (SBR) now operates 6 flights a week, daily except Saturday, using a 737-500.

(SBR) is reportedly planning to add 10 ex-Northwest Airlines (NWA) A319-100s to be delivered from July at a rate of 2 a month.

March 2006: Russian airlines reported a combined -RUB2.2 billion/-$78.7 million drop in net profit in 2005, according to a statement from the Federal Air Transport Agency cited by Russian media. Revenues increased +10% to RUB180 billion against a +20% lift in costs. The number of passengers grew +3.9% to 35.1 million and passenger revenues rose +3.4%.

April 2006: (GE) Commercial Aviation Training (GECAT) and Siberia Airlines (SBR) agreed to cooperate in the development of a new training center in Moscow to be built near Domodedovo. It is expected to open in the second quarter of 2007, according to (GECAT). It initially will house A300/A310 and 737-300 simulators from (GECAT) with plans to add 757/767 and A320 devices "from (GECAT)'s network."

"S7 Airlines" is the new name of "Siberia Airlines" (SBR), which unveiled the new moniker and logo in Moscow earlier this month. In conjunction with the unveiling, S7 (SBR) announced upgrades to its Internet sales platform, business lounges at Moscow Domodedovo and Novosibirsk and office and terminal decor and uniforms, all of which are designed "to support the dynamic growth and development from a regional carrier to the biggest Russian airline," according to Konstantin Koshman, Director Marketing & Regional Development.

In addition, S7 (SBR) announced the following service increases: Irkutsk - Beijing from 2x-weekly to 3x-weekly from June, Novosibirsk - Beijing to 5x-weekly from four from July, a new daily Domodedovo (DME) - Perm service from April 11, a second daily (DME) - Samara flight from April 10 and a fourth daily (DME) - Chelyabinsk flight from April 3. All new Domodedovo flights are aboard 737-500s. S7 (SBR) plans to expand its Chelyabinsk service to include routes to Sochi, Anapa, St Petersburg, Antalya, Khudzhand, Dushanbe, Yerevan and Rimini.

May 2006: S7 Airlines (SBR), will open an office in Perm. S7 (SBR) started serving the city April 11, operating 6x-weekly flights from Moscow with 737-500s.

Air Canada (ACN) Technical Services (ACTS) signed a $2.8 million Maintenance Repair & Overhaul (MRO) agreement with S7 Airlines (SBR) covering 10 newly leased A319s. (ACTS) will perform "C1" and "C4" airframe maintenance checks as well as "major" required and requested modifications prior to the airplanes' entry into service. Work will be performed in Montreal and Winnipeg and will be completed by the end of August.

June 2006: S7 Airlines (SBR) will inaugurate nonstop service from Moscow's Domodedovo Airport to Urgench (Uzbekistan). The airline will operate 1 flight a week, on Mondays, using a Tu-154.

1st A319 (VP-BTN), ex-Northwest Airlines (NWA) delivery - see photo.

July 2006: ACCDT: S7 Airlines (SBR) A310-304 (PW4152) (442, /87 F-OGYP), Flight 778, crashed on landing at Irkutsk, Siberia = 5/126 fatalities of 8/192 on board. Investigators say they believe that pilot (FC) error or mechanical failure are the most likely causes of the crash. But government officials said that they are also investigating reports that the speed brakes on the airplane had failed.

Reports from Russia are suggesting that the braking system failed on the (S7) Airlines (SBR) A310-304 that skidded on a wet runway after landing at Irkutsk International Airport (IKT) at approximately 7:50 am local time Sunday morning. 117 passengers and five crew were killed when the airplane broke through a 6-ft concrete barrier and crashed into a series of one-story garages. At least 20 passengers are in serious condition. There were 195 passengers and eight crew aboard the airplane, which was arriving from Moscow Domodedovo. S7 (SBR) said, "The airplane landed normally, touching down precisely in the part of the runway allocated for landing on the runway. Once the airplane had touched down, the crew reported the landing to an air traffic controller. The airplane, however, then overran the runway and crashed into obstacles (garages) right beside the runway."

The Pratt & Whitney (PW4152)-powered plane was delivered to Pan Am (PAA) off the production line in June 1987 and had accumulated 59,860 flight hours on more than 10,000 trips. It underwent a "C" check in July 2005 at Lufthansa Technik (DLH) (LTK)'s Frankfurt facility. The flight recorders are being analyzed, according to press reports. Flight Safety Foundation's Aviation Safety Network reported that the weather at (IKT) was "poor" with rain and overcast clouds at 600 ft. The airplane landed on runway 30, which is 3,165 m long. S7 (SBR) said the two pilots each had accumulated more than 9,600 hours of flying time without incident.

The airline will make a one-off payment of RUB50,000/$1,863 to each victim's next of kin to cover funeral expenses, with other compensation issues to be determined later or on a case-by-case basis. (S7) (SBR) is the new name of Sibir Airlines (SBR), Russia's second-largest, which re-branded in the spring. The A310 still wore (SBR)'s blue-and-white livery. S7 (SBR) operates 65 airplanes, including 16 Airbuses, according to "Reuters." Sunday's accident was the third major catastrophe to hit the carrier. In October 2001, a Ukrainian surface-to-air missile accidentally struck a Tu-154 on its way to Tel Aviv, killing 78 people. In August 2004, another Tu-154 was destroyed by a suicide bomber en route to Sochi from Moscow, killing 46.

Russia's (S7) Airlines (SBR) awarded Snecma Services an exclusive 10-year engine service per hour contract covering Maintenance Repair & Overhaul (MRO) services for its (CFM56-5A)s.

(S7) Airlines (SBR) will use an A310-200 on its services to and from Yakutsk following the resolution of operational issues at the airport. It has been using Tu-154s. Also, (S7) (SBR) will place its code on 10x-weekly flights between Moscow Domodedovo and Chisinau operated by Air Moldova (MOL) aboard A320s.

October 2006: (S7) Airlines (SBR) now is operating its Moscow Domodedovo - Irkutsk service with a 128-seat, A319. It has leased six of the type this year. It suffered a fatal crash in July when an A310-300 operating the route slid off a wet runway at Irkutsk and crashed into buildings.

Separately, (S7) (SBR) helped open the new arrivals hall at Novosibirsk's Tolmachevo Airport, bringing passengers in from Petropavlovsk-Kamchatsky. The terminal has been increased by 10,000 sq m with a new baggage facility that allows passengers to retrieve their luggage indoors. (S7) (SBR) is the main carrier at the airport, operating flights to 30 destinations.

(S7) (SBR) also announced it will launch an Almaty - Chelyabinsk service on October 31 aboard a 737-500. Chelyabinsk is its third destination in Kazakhstan.

December 2006: 2 737-528's (25206, VP-BRU; 25227, VP-BRV), (GECAS) (GEF) leased, wet-leased to Aviaprad (VID).

January 2007: 3 A319-114s (1149, VP-BTQ; 1164, VP-BTO; 1167, VP-BTT), ex-Northwest Airlines (NWA) wet-leased to Rossiya (SDM).

February 2007: (S7) Airlines (SBR) flew 4.9 million passengers in 2006, a +16.4% increase over the prior year. Traffic rose +14.2% to 12.5 billion (RPK)s, of which 60% was domestic and 40% international. The carrier added six A319s, four A310s, two 737-400s and two 737-500s last year, bringing its foreign-built fleet to 25. It also operates 27 Tu-154Ms and 9 Il-86s. It became the second Russian airline to pass the (IATA) Operational Safety Audit. It announced the issue of 2.3 million bonds worth RUB1,000/$38.05 each.

Started new 2/week Moscow (DME) - Ashgabad, using 737-500s (on March 28th, increased to 3/week).

March 2007: The Russian Federal Property Fund said it cancelled a planned auction of the government's 25.5% stake in S7 Airlines (SBR) owing to a lack of bids.

April 2007: (S7) Airlines (SBR) placed an order for 10 737-800s with options for +10 more.

May 2007: (S7) Airlines (SBR) transported 906,000 passengers in the first quarter, a +8% increase from the year-ago period. (RPK)s passenger traffic were up +2% to 2.3 billion.

(S7) Airlines (SBR) announced an order for 15 787s valued at $2.4 billion at list prices, plus 10 purchase rights.

Delivery date and engine choice were not announced. The order occurs as the airline, the largest domestic carrier in Russia, works to distance itself from last summer's A310 runway overrun in Irkutsk that claimed 124 lives. It passed the (IATA) (IAT) Operational Safety Audit (IOSA) audit in December and has committed to a fleet revamp that included the delivery of 14 Western airplanes last year as well as this order. "The 787's size and superior range, open up a wider choice of destinations, that we can offer our customers," General Director, Vladislav Filev said. (S7) (SBR), formerly Sibir Airlines, is the first Russian customer for the 787. Aeroflot (ARO) has committed to the A350 XWB.

(S7) (SBR) currently operates seven A310s, seven A319-100s, two 737-400s, 10 737-500s, nine IL-86s, and 28 Tu-154s. The IL-86s are due to be retired in the next few years. It has four A320s and 10 737-800s on order.

Aeroflot (ARO)'s international network bumps (S7) (SBR) to second overall among Russian carriers in terms of passenger numbers. It transported 4.9 million people in 2006, up +16.4% from the year before. 60% of its traffic is domestic.

June 2007: Lufthansa (DLH) Systems (LHS) announced that S7 Airlines (SBR) signed a five-year contract for deployment of Information Technology (IT) solutions, supporting its schedule management processes. The carrier has been flying with (LHS) Flight Management System (FMS) data since 2004.

At this month's Paris Air Show, the (S7) (SBR) Group ordered 25 A320s for (S7) Airlines (SBR).

July 2007: (S7) Airlines (SBR) said it recorded net profit of +RUB61 million/+$2.4 million for 2006, down -44.5% from a net profit of +RUB1.1 billion in the prior year, on a +27% increase in revenue to RUB24.97 billion. Passengers carried rose +16.4% to 4.9 million.

(S7) Airlines (SBR) said it has been negotiating a potential Oneworld (ONW) membership with British Airways (BAB). "Members of Oneworld (ONW) alliance are interested in having a reliable partner in the Russian aviation market, which today is one of the most promising and rapid-growing markets," (S7) (SBR) said. "(S7) (SBR) can become such a partner, as it possesses a unique and the most developed route network in Russia." Aeroflot (ARO) is a member of SkyTeam (SKT) and AirUnion (ZXD)/(DOD)/(OMK)/SMR), which said it intends to join an alliance by 2015, recently has forged strategic partnerships with Star Alliance (SAL) members Lufthansa (DLH) and Austrian Airlines (AUL).

(S7) (SBR) announced seasonal frequency additions from Moscow Domodedovo to Sochi, Anapa, Krasnodar, Astrakhan and Simferopol.

9 A319-114s (1819, VP-BHF; 1870, VP-BHG; 2028, VP-BHI; 2369, VP-BHJ; 2373, VP-BHK; 2464, VP-BHL; 2618, VP-BHP; 2641, VP-BHQ; 2474, VP-BHV), Miramonte (PK AirFinance), ex-Northwest Airlines (NWA).

October 2007: (S7) Airlines (SBR) said revenue through the year's first nine months, rose +27% year-over-year to $845 million, and full-year turnover will reach $1.17 billion, compared to RUB24.97 billion/$1 billion in 2006. (SBR) expects full-year (EBITDA) of $57 million. Nine-month passenger numbers grew +10% year-over-year to 4.3 million, with (RPK)s passenger traffic up +5% to 10.42 billion, and load factor ahead +3.6 points to 81.9% LF. Full-year passenger numbers are expected to soar +18% to 5.8 million.

The carrier (SBR) announced the launch of 3x-weekly, Moscow - Dublin service next summer, aboard A319s, which it said will be the only direct route between the cities.

Russian airlines have been ordered by the Transport Ministry to follow a list of customer service regulations beginning October 20 or risk fines and the eventual loss of their operating licenses, "The Moscow Times" reported. Under the new directives, airlines are forbidden from denying travel in the case of lost or stolen tickets and must provide hot meals every 4 hours and hotel rooms in the case of extended delays, among other things, the paper said.

November 2007: (S7) Airlines (SBR) launched 3x-weekly, Moscow Domodedovo - Khabarovsk service, aboard an A310. (S7) (SBR) is increasing its operation at Khabarovsk, basing a 148-seat Tu-154 at the airport, and raising frequencies to Novosibirsk, Yuzhno-Sakhalinsk, Petropavlovsk-Kamchatsky, and Magadan.

Jordan Airline Training & Simulation (JATS) signed an agreement with (S7) Airlines (SBR) under which the Russian carrier will send 20 pilots (FC) to train on (JATS)' two A320-200 full flight simulators with (JATS) instructors. The pilots (FC) also will receive safety and emergency training, while one will take a simulator instructor course. S7 (SBR) ordered 25 A320s at last summer's Paris Air Show.

(SITA) Passenger and Travel Solutions and (S7) Airlines (SBR) launched online calendar booking via (SITA) Airfare Shop. (S7) (SBR) said it is the first Russian carrier to display all fares across multiple days and offer calendar-based booking for all domestic and international flights. It currently sells 6.3% of its tickets on its website and expects "further significant growth in 2008."

December 2007: (S7) Airlines (SBR) introduced the A319 on its thrice-daily Moscow Domodedovo - Krasnodar service. It claimed it is the first airline to serve the southwestern destination with Western-built airplanes. (S7) (SBR) currently operates 12 A319s.

January 2008: 2007 statistics: 13.9 billion (RPK)s passenger traffic +11.2%; +7% capacity (ASK)s; +3.1 load factor for 80.9% LF.

SEE ATTACHED COMPARISON CHART TO SELECTED OPERATORS - "SBR-2007-STATS."

February 2008: (S7) Airlines (SBR) said it increased full-year turnover +24% in 2007 to more than >RUB30 billion/$1.2 billion as passenger numbers climbed +16% to 5.7 million. (SBR) reported a net profit of +RUB61 million in 2006, down -44.5% from the previous year, but did not divulge its net result for 2007. It did say (EBITDA ) "reached" RUB2.8 billion but did not provide a year-ago comparison. It said the results were based on "preliminary data."

Domestic passengers jumped +22%, while international passengers climbed +8%. Load factor rose +3 points year-over-year to 80.9% LF and traffic was up +11% to 13.9 billion (RPK)s.

(S7) (SBR) added 10 A319s during the year, bringing its fleet to five A310-200s, two A310-300s, 16 A319s, five 737-500s, two 737-400s, nine Il-86s, and 27 Tu-154Ms. This year, it will take delivery of four A320s on lease from (ILFC) (ILF). (SBR) will begin taking delivery of 25 purchased A320s next year, 10 737-800s the following year, and 15 787s in 2014.

(SBR) launched 25 routes last year including six internationally. Last month, it announced completion of construction of a new facility to house its emergency rescue trainers for crews operating 737s and A320 family airplanes, as well as its Russian-made fleet. (SBR) has begun building a 4,000-sq-m flight crew training facility set to be completed in November, that will house four integrated flight trainers.

"(SBR) is investing a lot of money in the development of its flight crew training system. The training processes themselves, including the training of young pilots (FC), are also being improved. Despite the industrywide trend of aging flight personnel, the average age of current (S7) Airlines (SBR) pilots (FC) has substantially fallen," Director Training, Oleg Vasiliev said. (SBR) recently added a $1 million A320 maintenance/flight trainer that will allow pilots (FC) to complete 30% of their training in-house.

March 2008: (S7) Airlines (SBR) will launch 3x-weekly, Moscow Domodedovo - Dublin on April 27, aboard an A319.

S7 Airlines (SBR) will relaunch flights from Moscow Domodedovo (DME) to Tbilisi (3x-weekly) and Kutaisi (2x-weekly) on March 30, and begin weekly, (DME) - Batumi on June 7.

Beijing Capital International Airport's new $3 billion-plus Terminal 3 opened as Shandong Airlines (SHG) (flight SC1151 arrived from Jinan at 8:39 am. UK architect, Norman Foster claimed it is the largest covered structure ever built - - 3.25 km long and 1.3 million sq m of floor space. Construction began in March 2004. The airport said the three-concourse facility welcomed Shandong (SHG), Sichuan Airlines (SIC), Qantas (QAN), Qatar Airways (QTA), British Airways (BAB), and El Al (ELA). A second move is scheduled for March 26 when Air China (BEJ), Shanghai Airlines (SHA), (SAS), Austrian Airlines (AUL), Lufthansa (DLH), Asiana Airlines (AAR), Air Canada (ACN), United Airlines (UAL), (ANA), Thai Airways (TII), Singapore Airlines (SIA), Finnair (FIN), Cathay Pacific Airways (CAT), Japan Airlines (JAL), Dragonair (DRG), Turkish Airlines (THY), Emirates (EAD), Air Macau (MCU), S7 Airlines (SBR), and EgyptAir (EGP) will transfer to the new building. "Reuters" reported that airport capacity will be boosted to 76 million per year from the 52 million it served in 2007. The baggage system can handle 19,800 pieces per hour, it said.

Airbus (EDS) projected that Russian airlines will need more than >900 passenger airplanes, valued at $79 billion, over the next 20 years to meet demand for both replacement and fleet growth. Russian passenger traffic is expected to increase +6.2% (RPK)s annually on average over the next two decades, faster than the world average of 4.9%, Airbus (EDS) said.

Technical problems will postpone delivery of the first Sukhoi Superjet indefinitely, the Russian manufacturer announced. First deliveries originally were slated to begin by late 2008. "The airplane is currently in the final testing stages and it will make its first flight within a month," Alexei Fyodorov, CEO of United Aircraft Building Corp, told "RIA Novosti." "Our specialists are working round the clock to meet our obligations to contractors." Recently, Superjet International (CEO), Alessandro Franzoni told the SpeedNews Commercial Aviation Suppliers Conference in Los Angeles that the regional jet's first flight was "imminent." To date, the 78/98-seat airplane family has garnered 73 firm orders plus 46 options, the bulk of them from Russian customers. The company hopes to market some 700 airplanes priced at $25 to $28 million. Program suppliers include Honeywell (SGC), Parker, Thales (THL), and Goodrich (BFG). The SaM 146 engine is supplied by Powerjet, a joint venture (JV) between Snecma and (NPO) Saturn.

S7 Airlines (SBR) will add four A320s to its fleet during its summer schedule. The first already has been delivered and will begin flying from Moscow Domodedovo (DME) to Barnaul and Krasnodar this month. Others will fly from (DME) to Kemerovo, Sochi, Novosibirsk, and Frankfurt, and from Novosibirsk to Vladivostok, and Beijing, where S7 (SBR) will operate out of the new Terminal 3. A320s will replace Tu-154s. It will use A319s on a 3x-weekly, (DME) - Dublin service beginning April 27. The summer schedule also includes increased service from Omsk, from which it will launch flights to Khudzhand, Dushanbe, St Petersburg, and Irkutsk.

A320-214 (3446, VP-BCZ), delivery.

April 2008: Russia's S7 Airlines (SBR) reported an 80% jump in full-year profit to +RUB109.7 million/+$4.7 million according to Russian accounting standards as 2007 revenue increased +25% to RUB31.12 billion. "Last year, the airline demonstrated a stable increase in all the financial indicators," General Director, Vladislav Filev said, citing a +16% growth in passengers to 5.7 million as the primary driver. "In addition, the increase in the company's efficiency is directly associated with the renewal of the company's fleet, namely, the commissioning of 10 [A319s]." S7 (SBR) now operates seven A310-200s/-300s, one A320, 17 A319-100s, two 737-400s, three 737-500s, nine Il-86s, and 27 Tu-154Ms. It will take delivery of three more A320s this summer.

"Most air carriers in Russia use Russian airplanes, so their expenditures on aviation fuel are higher. By modernizing its fleet, S7 Airlines (SBR) not only provides comfortable conditions for passengers, but also reduced its direct expenses," Financial Director, Ilya Alexandrovsky said.

737-522 (26675), returned to (GEF) and leased to Macedonian Airlines (MCC) as (Z3-AAH). A320-214 (3473, VP-BCP), delivery.

May 2008: S7 Airlines (SBR) is a major Russian airline operating scheduled passenger and cargo, jet airplane flights from its main base in Moscow Domodedovo and five major regional hubs to destinations within Russia and the (CIS), as well as international services to China, Germany, Israel, South Korea, Turkey, and the United Arab Emirates (UAE).

(IATA) Code: S7 - 421.

(ICAO) Code: SBI (Callsign - SIBERIAN AIRLINES.

Parent organization/shareholders: Employees (51%); state holding (25%); & other shareholders (24%).

Shareholdings: Armavia (ARZ) (70%).

Main Base: Moscow Domodedovo International Airport (DME).

Hubs: Novosibirsk-Tolmachevo airport (OVB); Moscow Vnukovo Airport (VKO); Chelyabinsk Airport (CEK); Perm Airport (PEE); & Irkutsk Airport (IKT); & Khabarovsk-Novy Airport (KHV).

Domestic, Scheduled Destinations: Adler/Sochi; Barnaul; Bratsk; Irkutsk; Kazan; Kemerovo; Khabarovsk; Krasnodar; Magnitogorsk; Makhachkala; Mineralnye Vody; Moscow; Murmansk; Nizhnevartovsk; Nizhniy Novgorod; Norilsk; Novokuznetsk; Novosibirsk; Novy Urengoy; Omsk; Petropavlovsk-Kamchats; Rostov; St Petersburg; Tomsk; Ulan-Ude; Vladkavkaz; Vladivostok; Yakutsk; & Yuzhno-Sakhalinsk.

International, Scheduled Destinations: Baku; Bangkok; Beijing; Donetsk; Dubai; Dushanbe; Dusseldorf; Frankfurt; Hanover; Khudzhand; Kiev; Kutaisi; Munich; Seoul; Shenyang; Tashkent; Tbilisi; Urumqi; & Yerevan.

S7 Airlines (SBR) took delivery of two new 164-seat, A320-214s (3490, VP-BCS; 3494, VP-BDT), on lease from (ILFC) (ILF). The airplanes are already in service. S7 (SBR) plans to take six more A320s this year. Its fleet now comprises 17 A319-100s, two A310-300s, five A310-200s, four A320-200s, three 737-500s, two 737-400s, nine Il-86s and 27 Tu-154Ms.

July 2008: S7 Airlines (SBR) announced the issuance of RUB2.3 billion /$98.2 million in debentures scheduled to mature five years from the date of issue. Alpha Bank is lead manager. S7 (SBR) said the issue is designed to "refinance the debt portfolio."

Snecma Services signed a 13-year exclusive engine service per-hour contract with Russia's S7 (SBR) covering its (CFM56-5A)s.

4 737-800s, 1 767-300ER, and 2 A320-200s, (all (ILF) 6 year leased.

August 2008: S7 Airlines (SBR) flew 8.48 billion (RPK)s through the first seven months of 2008, up +18.1% from the year-ago period. Passenger numbers rose +20% to 3.5 million, and load factor slipped -0.2 point to 79.2% LF.

The Austrian government's Council of Ministers issued a contract for the privatization of Austrian Airlines (AUL) Group (AAG) to state holding company (OIAG), is entitled to sell the entirety of its 42.75% stake. The contract stipulates that Austrian interests must hold 25% plus one share. Merrill Lynch has been appointed as exclusive financial adviser in the potential sale of (OIAG) shares to a strategic partner. S7 Airlines (SBR) sent a letter to state holding company (OIAG), expressing its interest in bidding for the (AUL) stake, "ORF" television reported. S7 (SBR) rival Aeroflot (ARO) declined to bid. (SBR) told "Bloomberg" it is "indeed considering participating in the bidding, but we cannot comment on whether we have actually placed a bid." (SBR) told "Reuters" that it is "interested in (AUL) from the point of view of business development as well as its international component."

September 2008: S7 Airlines (SBR) is the top airline at Moscow (DME) Airport, which in January through July 2008, handled 5.0 million domestic passengers and 6.9 million international passengers, for a total 11.9 million. This gave the airport a ranking of No 1, the highest in Russia, with the others (in millions) being: 2 Moscow (SVO) 8.6; 4. St Petersburg 4.0; 5. Yekaterinburg 1.4; 6. Novosibirsk 1.1; 7. Kaliningrad 1.0; 8. Sochi 0.9; 8. Krasnodar 0.9; 10.0 Samara 0.8. (SBR) is also the top airline at Novosibirsk (0.9 domestic & 0.2 international) and Sochi (0.8 domestic & 0.1 international) airports.

Starting in December, (SBR) will fly to Bangkok, Thailand’s capital from Moscow (DME) three times a week, with 767-300ERs. S7 (SBR) also serves Bangkok from Novosibirsk and Irkutsk, both in Russia’s famously cold region of Siberia. The Russian government owns 25% of S7 (SBR).

S7 Airlines (SBR) will launch thrice-weekly, Moscow Domodedovo - Bangkok Suvarnabhumi on December 23, using 767-300ERs.

S7 (SBR) said passenger numbers through the first eight months of 2008 rose +16.1% year-over-year to 4.2 million, while load factor was down -1.1% to 80.1% LF.

(SBR) is moving to shed all of its obsolete Soviet model planes, namely narrowbody Tupolov Tu-154s, and widebody Ilyushin Il-86s.

October 2008: The Russian Finance Ministry is "ready" to issue RUB30 billion/$1.1 billion in loans to airlines to cover fuel purchases, Deputy Prime Minister, Sergei Ivanov told "RIA Novosti." He also revealed that in the next couple of weeks, the government will propose six-month deferments of payment of taxes and duties on foreign-made airplanes, engines and training equipment.

S7 Airlines (SBR), AirBerlin (BER), and Niki (NKI) announced a code share agreement in Moscow and promised that "all three airlines intend to deepen their relationship in other areas in the future." The agreement initially covers flights from Moscow Domodedovo to Frankfurt, Hannover (both operated by S7 (SBR)), Dusseldorf, Munich (both operated by S7 (SBR) and (BER)) and Vienna (operated by Niki (NKI)). The airlines "plan to offer unrestricted sales of tickets for each others' flights" and passengers will have access to all three networks with one ticket. Talks among the trio began five months ago.

S7 (SBR) CEO, Vladislav Filev would not say whether the agreement might lead to an investment in either (BER) or Niki (NKI), saying that was "not on today's agenda." He also would not comment on S7 (SBR)'s interest in Austrian Airlines (AUL), saying only that "we have many invitations for partnerships." None of those offers have come from an alliance, however. "As of today, we have no invitation from any alliance. Everyone wants us, but we will see how hungry they are. Maybe Star (SAL) will become hungrier," Filev said.

Meanwhile, Niki (NKI) President, Niki Lauda expressed excitement about new opportunities in Russia. "The time is right to expand our Vienna - Moscow services to double-daily, starting in the spring of next year," he said. "As soon as we have traffic rights we will start Vienna - St Petersburg. Air Berlin (BER) CEO, Joachim Hunold and I created the first low-cost airline alliance. Now I am happy that S7 (SBR) will help in Russia."

S7 (SBR) Engineering, an S7 (SBR) Group subsidiary, launched in 2006 that performs Maintenance Repair & Overhaul (MRO) on foreign-made airplanes, announced successful audits by (EASA) and the Bermuda Department of Civil Aviation. S7 (SBR) now is certified to perform maintenance, including "A" checks, on 737NGs. It also can service avionics on A320 family airplanes, using the S6 Automatic Test Equipment Complex and service emergency rescue equipment on both Boeing (TBC) and Airbus (EDS) airplanes.

S7 Airlines (SBR) plans to phase out the last of its 35 Russian-built airplanes this month owing to lower passenger demand. "The summer season was an alarm bell for us," CEO, Vladislav Filev said in Moscow, calling the decision to ground S7 (SBR)'s 27 Tu-154s and eight Il-86s "dramatic," and necessary to remain profitable. Russia's second-largest airline in terms of passengers carried, S7 (SBR) will reduce its maintenance costs by -50% with the move, but also will have to eliminate -600 crew (FC)/(CA) and -1,000 (MT) Maintenance Repair & Overhaul (MRO) positions, as it closes the base that handles Tupolev and Ilyushin maintenance. "We are not growing as fast. With this measure, we will be fit for the winter season," Filev said, adding that S7 (SBR) will concentrate on growing yield, rather than seat factor and requires loads in the "lower 70% LF" to break even.

With fewer airplanes, the carrier will look to maintain its 12.6% market share through increased efficiency, with Filev saying that flight hours per airplane may increase from an average 368 to as many as 600. It operates 21 A320 family airplanes, seven 737-400s, seven A310s, and one 767-300ER. By the end of 2009, the fleet should comprise 30 A320 family airplanes, six 737-400s, nine 737-800s, seven A310s, and five 767-300s. He doesn't expect the first of seven 787s to arrive until 2014. "Before this plane arrives, I will be retired," he joked.

S7 Airlines (SBR) confirmed that November 17 will be the last day it operates any Russian-built airplanes. It said its October 26 - March 28 winter schedule includes 69 destinations and will feature the December 23 launch of Moscow Domodedovo - Bangkok service aboard a 767-300ER. It said it will cut flights to "some" Russian cities whose airports have not been cleared to handle foreign-built airplanes.

S7 (SBR) flew 11.65 billion (RPK)s traffic through the first nine months of 2008, up +11.6% from the year-ago period. Passenger numbers climbed +12.6% to 4.8 million, and load factor fell -1.8 points to 80.3% LF.

S7 (SBR) expects $1.8 billion in revenue this year, up from $1.2 billion last year, when 5.7 million passengers flew with the carrier. "Of course there is a shrinking in our cash, because of the crisis, but we are in better shape than others [Russian airlines]," Filev said. "Everyone will be dead one day, but we will try to die last."

Aeroflot (ARO) holds an 18.1% share of the Russian market, which comprises 45 million passengers per year. Filev said he expects consolidation through bankruptcy, rather than mergers, which "make no sense" for S7 (SBR), since most carriers operate domestically produced airplanes.

S7 Airlines (SBR) took delivery of its first of three 767-300ERs and its fourth 737-800. The 767 was leased from (AWAS) (AWW) and will begin flying this month from Moscow Domodedovo to Novosibirsk and Yerevan, the carrier said. Subsequent 767s will replace A310s on flights to Bangkok and Vladivostok. The airplanes will seat 222 in economy (Y) and 18 in business class (C). The 737 was leased from (ILFC) (ILF).

November 2008: S7 Airlines (SBR) reported a nine-month profit of +RUB157 million/+$5.7 million, nearly double the year-ago result, according to "RIA Novosti." The carrier earned +RUB109.7 million in 2007. Revenue through the first nine months of this year climbed +44% year-over-year to RUB31.93 billion.

S7 (SBR) resumed weekly, Novosibirsk - Bishkek service aboard an A320.

The Russian Federal Antimonopoly Service (FAS) will attempt to block Aeroflot (ARO)'s effort to acquire the state's 25.5% stake in S7 Airlines (SBR), (FAS) head, Igor Artemyev said on Vesti television. "We have concerns about transferring the blocking stake in the private company to (ARO). A monopoly could form in this situation . . . We will try to block this deal," Artemyev said, according to "Reuters." The Ministry of Transport said this week that it supported (ARO)'s bid.

S7 Airlines (SBR) CEO, Vladislav Filev said the carrier has "received a verbal offer from an investment company, which is acting in the interests of an undisclosed client" and has hired an unnamed bank to assess the offer, "Reuters" reported. No further details were available. Aeroflot (ARO) has expressed interest in acquiring the state's 25.5% stake in S7 (SBR).

Russian investor Alexander Lebedev intends to sell half his 30% stake in Aeroflot (ARO) through his National Reserve Corp (NRC) and go after the Russian government's 25% share of S7 Airlines (SBR), (NRC) Deputy General Director Leonid Dushatin told "Reuters." (NRC) will sell the shares at approximately RUB72.1/($2.58) each, the news service reported, and "part of the money will go toward buying the government's stake in (SBR)," Dushatin said, adding that (NRC) has received government approval for the move, and already has reached a deal to purchase more (SBR) shares from majority owners Vladislav and Natalia Filev.

(AWAS) (AWW) leased a 2nd 767-300ER to (S7) Airlines (SBR).

January 2009: Niki (NKI)'s partnership with (S7) Airlines (SBR) continues to be delayed by Russian regulators, (CEO) Othmar Lenz said. "(SBR) needs traffic rights between Moscow Domodedovo and Vienna. If (SBR) gets these rights, then we can implement code share operations," Lenz said. Bilateral talks should be completed next month. The partnership also includes Air Berlin (BER), which holds 24% of (NKI) and made news last week following the sale of lead investor Len Blavatnik's 18.94% stake. (NKI) President, Niki Lauda said he does not know who bought the (BER) shares and that Etihad Airways (EHD)'s potential involvement remains "a sort of rumor." Blavatnik owned the stake in (BER) through Dutch investment company AI Aviation Cooperatief.

Lauda expects a 2008 profit, but said 2009 "will be a horror year for all of us." Niki will take delivery of its 1st E190 on schedule in May and operate it on routes from Vienna to Munich and Innsbruck, but on the whole it will "have to be flexible and make decisions faster than other carriers," Lauda said, adding that a 2nd A321 also has been financed and is due for delivery this year. (NKI) transported 2.2 million passengers in 2008, up +30% year-over-year, with 60% coming from scheduled traffic and the remainder from charter. (NKI) will operate 12 airplanes this year.

(SBR) has canceled its order for 15 787s, becoming the 1st carrier to terminate a major deal for Boeing (TBC)'s delayed next-generation wide body. The cancellation date was unclear, but (TBC) conceded it had lost a 787 order when it reported its 4th-quarter and full-year 2008 results. (SBR) did not offer a reason for the cancellation but said in a statement that it "retains interest in using the Dreamliner and at the moment is looking into receiving the planes under a leasing scheme at an earlier date, for which it is in negotiations with several leasing companies." (SBR)'s order, which also included 10 purchase rights, was placed in May 2007. The firm airplanes were valued at $2.4 billion at list prices and were scheduled to begin delivering in 2014. A (TBC) spokesperson told "RIA Novosti" that (TBC) "is still in daily contact with (SBR), which remains an important client."

(TBC)'s 787 backlog now stands at 895 from 58 customers. Overall, it has taken 914 gross orders for the 787 Dreamliner. In addition to the (SBR) cancellation, Xiamen Airlines (XIA) in 2006 replaced an order for 3 787s with an order for 7 737-800s and Azerbaijan Airlines (AZB) replaced 1 787 with 1 767-300ER last summer.

(TBC) has delayed the 787 program 5 times, with the latest postponement in 1st flight and 1st delivery announced last month, frustrating customers that made the airplane a central component of growth plans. Continental Airlines (CAL), which has firm orders for 25, said it does not expect to take delivery of its 1st 787 until 2011 and will receive three that year at best. It originally expected to start receiving 787s this year. Chairman & (CEO) Larry Kellner told reporters and analysts that he fears the delivery rate of (CAL)'s remaining 22 787s will be "slower" than previously anticipated. "We're clearly going to be 2 or 3 years behind our [original 787 deployment] plan," he said. (CAL) has slowed international growth owing to both 787 delays and the weak global economy. Kellner said it "won't go to +5% to +7% growth [its targeted international capacity expansion rate] until we get those planes" regardless of how fast the economy recovers. He said that despite the delays, the 787 will be a "game changer" and give (CAL) the "flexibility" in long-haul flying it now lacks.

February 2009: (S7) Airlines (SBR) transported 5.9 million passengers in 2008, up +3.4% from the prior year, on a +3.1% lift in (RPK)s traffic to 14.35 billion. Load factor fell -1.8 points to 79.1% LF.

Russia's Federal Anti-monopoly Service (FAS) is intent on abolishing overflight fees charged to foreign airlines, which traditionally benefit Aeroflot (ARO). (FAS) Director, Igor Artemyev told reporters that his agency has prepared a relevant draft decree to be submitted for government approval shortly. Since the late 1970s, foreign operators have been paying pro-rate charges for transiting airspace over Siberia on routes between Europe or North America and Asia. Under this practice, Aeroflot (ARO) receives substantial additional revenue, which industry experts estimate at $200 to $400 million per year. "We don't mean to harm Aeroflot (ARO) in any way, but that system of imposing feudal royalties is an absurdity and should be eliminated," Artemyev said.

Discussing the matter with Russian counterparts in 2005, European aviation authorities claimed that payments for rights to fly on trans-siberian routes cost (EU)-based carriers >€250 million annually. Founders of newly formed aviation holding, Rosavia also are lobbying against overflight charges, citing the advantage gained by Aeroflot (ARO), which Rosavia is designed to rival. The Transport Ministry, however, is opposed to scrapping the charges in the short term. Minister, Igor Levitin told reporters that the fees should remain in place at least until after 2014, when Russia will host the Winter Olympics in Sochi.

(SITA) announced that (SBR) will implement (SITA) Marketplace-Air, enabling sales agents, partner travel agents and customers booking on (SBR)'s website to access last-seat availability on 530 airlines through (SITA) Reservations. (SBR) is the first carrier to opt for the new service within (SITA) Reservations that provides real-time access to the inventory of an additional +400 airlines via a single booking solution through a partnership with Travelport Global Distribution System (GDS).

March 2009: (S7) Airlines (SBR) will launch weekly, Moscow Domodedovo - Madrid service on June 6 aboard an A319 and weekly, Novosibirsk - Alma Ata flights on April 3 aboard an A320-200.

April 2009: A320-214 (3866, VQ-BDE), (ILF) leased.

May 2009: S7 Airlines (SBR) will join Oneworld (ONW) next year, the 10-member group announced, adding 54 new destinations and eight new countries (Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan) to the alliance's network.
(SBR) will be the second Russian carrier in an alliance. Aeroflot (ARO) joined SkyTeam (STM) three years ago. (SBR)'s first step toward integration will be its June 1 addition to (ONW)'s Global Explorer round-the-world fare. British Airways (BAB) will be its sponsor and adviser during the 18-month alliance implementation program.

(SBR) carried 6 million passengers in 2008 and operates 26 A320 family airplanes, seven A310s and two 767s. It earned a +$3 million net profit in 2008 on revenue of $1.7 billion and is 25% state owned. (ONW) members (BAB), American Airlines (AAL), Iberia (IBE), Japan Airlines (JAL) and Royal Jordanian (RJA) serve (SBR)'s Moscow Domodedovo hub. Mexicana (CMA) is set to join the alliance this year.
"(SBR) fills one of (ONW)'s few remaining membership white spaces with a carrier that matches our alliance's demanding quality requirements. It will expand (ONW)'s presence substantially in Russia and the [CIS]," (ONW) Managing Partner, John McCulloch said. (SBR) CEO, Vladimir Obyedkov said membership "will also strengthen us financially, through revenues from passengers transferring to our network from our (ONW) partners and the cost reduction opportunities the alliance offers."

Meanwhile, in Athens, Star Alliance (SAL) CEO, Jaan Albrecht said he was not bothered by the fact that his group will be the only one of the three global alliances to lack a Russian member. He stressed there is no "rush for Russia" and that the (SAL) talked to (SBR), the defunct AiRUnion alliance and Transaero Airlines (TRX) in the past as part of its strategy to recruit members in Russia, Brazil, India, and China. It has secured commitments from major carriers in the latter three nations. "The Russian airline industry is still very unsettled," he said at the Aegean Airlines (CRM) joining event in Athens. "There are still too many airlines in Russia and it's still a very uncertain environment. Look at what happened to AiRUnion. Two years ago they were the upcoming airline group in the (CIS), but they folded. We have time. We will not rush into announcing a member because others do so"

Aeroflot (ARO) declined Alexander Lebedev's offer to purchase his 49% stake in Blue Wings (BLW) for €1/$1.35), Blue Wings (BLW) Chairman, Jorn Hellwig told "Der Spiegel." Lebedev now is considering negotiating with S7 Airlines (SBR) and Rosavia, as well as Arabian investors, in his search for more capital. Discussions with Air Berlin (BER) or the German government also may occur, Hellwig said.

A320-214 (3880, VQ-BDF), (ILF) leased.

July 2009: S7 Airlines (SBR) re-launched Irkutsk service to Tashkent (once-weekly) and Beijing (twice-weekly) aboard new A320s.

(SBR) and Austria's Niki (NKI) announced a code share deal under which (NKI) will place its code on (SBR)'s six-times-weekly, A319/A320 Moscow Domodedovo - Vienna flights.

September 2009: Royal Jordanian (RJA) and S7 Airlines (SBR) reached a code share deal under which (SBR) will place its code on (RJA)'s thrice-weekly, Amman - Moscow Domodedovo flights.

November 2009: S7 Airlines (SBR) dismissed rumors that surface regularly in the Russian media that it will be absorbed by Aeroflot (ARO) and confirmed that it is on track to join the Oneworld (ONW) alliance in November 2010. "I'm sure (ARO) would like to acquire us and our network, but we are not for sale," Credit Risk & Alliance Manager, Ilya Alexandrovskiy stressed at the Mexicana (CMA) Oneworld (ONW) joining event in Mexico City. (SBR), which was technically bankrupt in February but since has restructured its debt, is "operational in excellent shape," Alexandrovskiy added. "The decision last winter to ground our Tupolev and Ilyushin fleet and operate only Western-built airplanes allowed us to be profitable," he noted, stating that S7 (SBR) was profitable for the nine-month period ended September 30. Traffic in the first nine months fell -15% to -20% "in line with the Russian market." Implementation of Oneworld (ONW) joining requirements is progressing "well," he said. "We are on track to formally join in November next year."

December 2009: Moscow Domodedovo airport (DME) announced that "in accordance to (ICAO) Standards and Recommended Practices," it now is capable of operating simultaneous departures from its parallel runways spaced 2 km apart. (DME) said this will "ensure future increased capacity" up to 90 movements per hour. (DME) is Russia's largest airport in terms of passenger traffic, with a 45% share of passenger volume. It is served by 80 airlines.

2 A320-214s (4032, VQ-BES; 4150, VQ-BET), deliveries.

January 2010: Iberia (IBE) and S7 Airlines (SBR) are code sharing on each other's Madrid (MAD) - Moscow Domodedovo service. (SBR) operates the route weekly and (IBE) will increase its 11-times-weekly flight to twice-daily at the end of March. It will resume its twice-weekly (MAD) - St Petersburg service on June 1.

February 2010: S7 Airlines (SBR) and Windrose Aviation (WRC) have entered into a code share arrangement5 on flights between Russia and the Ukraine. The deal will initially cover flights between Moscow and Lviv, but may be later extended to other destinations.

The Russian government announced plans to merge a series of smaller airlines, including St Petersburg-based Rossiya (SDM), into Aeroflot (ARO). Russian Transport Minister, Igor Levitin said the consolidation would lift (ARO)'s domestic market share to 30% to 35% from 15% to 20%, according to "RIA Novosti." Other carriers involved are Kavminvodyavia (KMV), Orenburg Airlines (ORB), Vladivostokavia (VLK), Saratov Airlines, and Sakhalin Airlines (SKH), according to "ITAR TASS." They originally were to be combined in a new state-owned carrier called Rosavia, plans for which now have been shelved.

Rossiya (SDM), Kavminvodyavia (KMV) and Orenburg Airlines (ORB), three of the six airlines scheduled to be combined with Aeroflot (ARO) under a Russian government plan announced this month, will be transitioned from state-owned enterprises into joint stock companies prior to the merger, "The Moscow Times" reported. The other three, Vladivostokavia (VLK), Saratov Airlines and Sakhalin Airlines (SKH), already are joint stock companies. Transport Minister, Igor Levitin said the stake sales will occur this year. He said the move is "compatible with the anti-monopoly regulations."

March 2010: The Russian government set aside RUB2.5 billion/$84.3 million to subsidize 11 airlines to carry passengers to/from the country's far east from April 1 to October 31, an official told "ITAR-TASS." Aeroflot (ARO), Transaero Airlines (TRX) and S7 Airlines (SBR) are among the group.

Alliance among Air Berlin (BER), Niki (NKI) and S7 Airlines (SBR) is "quiet" while the first two carriers await expanded traffic rights to Russia. "Without more traffic rights, we are not able to do much more in terms of cooperation," Niki (NKI) President, Niki Lauda said. (NKI) hopes to double its Vienna - Moscow Domodedovo (DME) service to twice-daily, and launch flights to St Petersburg. The (DME) expansion was scheduled to take place over the summer, "but we have had to reschedule," Lauda said. He is hoping that Austrian Airlines (AUL) will cede one of its frequencies to Niki (NKI) as part of its merger with Lufthansa (DLH). Russian authorities continue to express concern about whether the merger compromises current bilateral agreements between Russia and Austria. (DLH) Chief Officer Group Airlines & Corporate Human Resources (HR), Stefan Lauer told Austria's "Der Standard" that "it would be nonsense to give up grandfathered traffic rights to Russia after so many years developing the market." Russia will have the final word, however. (AUL)'s rights expire at the conclusion of the winter schedule.

Nizhny Novgorod is an economic and industrial center that is Russia's fourth most populous city with nearly 1.5 million residents, but its airport handles only 300,000 passengers per year and is served by just one non-(CIS) airline (Lufthansa (DLH)).

Now the regional government is working to change that and has launched a process designed to modernize Nizhny Novgorod International airport (GOJ) into a facility capable of serving more than >2 million passengers annually in 2014.

Region Governor, Valery Shantsev admitted that his administration "is not satisfied with the condition of the airport today." It has a 2,805-m Instrument Landing System (ILS) concrete runway and a 2,509-m non-(ILS) asphalt runway, and Shantsev said that "the equipment dates back to the 1960s."

The first step toward creating a 21st-century airport came when the government contracted Hochtief to conduct a study on overhauling and expanding (GOJ) and to consult on a search for an operator/investor. Shantsev said the government is looking for $300 million initially and will entertain bids from both Russia and abroad.

(GOJ)'s original operator dissolved following the collapse of the Soviet Union and the government has been keeping the airport afloat since then. "The only profit center was leasing fees and a modest number of domestic flights," Shantsev said. S7 Airlines (SBR) and UTair Aviation (TYU) operate at (GOJ). Austrian Airlines (AUL) ended service as part of its recent network reduction.

Nizhny Novgorod Region Department for International, Foreign Economic & Interregional Relations Director, Vadim Ivanov said that the local population has gotten used to traveling to Moscow, often by either car or train, in order to fly. The capital is about 250 miles to the east. But its airports are "now overloaded," he said, and the prospect of reaping the benefits of transforming (GOJ) into a transport hub and increasing cargo capacity eightfold have prompted the partnership with Hochtief and the search for investment and expertise.

September 2010: The Oneworld (ONW) alliance announced that S7 Airlines (SBR) will officially become a full member of the alliance on November 15. (SBR), which began the process of joining the Oneworld (ONW) alliance last year with British Airways (BAB) as its sponsor, will become the (ONW) alliance's 11th member. It becomes the second Russian airline to join a global alliance; Aeroflot (ARO) became a SkyTeam (STM) alliance member in 2006. (SBR), Russia's top domestic carrier by traffic, will add +55 destinations to (ONW)'s network including linking the alliance to Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. "This will almost triple the number of destinations served by the (ONW) alliance in Russia, the (CIS) and other parts of East Europe to a total 84 destinations in 26 countries," the (ONW) said. Current members (BAB), Cathay Pacific (CAT), Finnair (FIN), Iberia (IBE), Japan Airlines (JAL), Malev (HGA), and Royal Jordanian (RJA) all serve Moscow.

"Work is well advanced in linking up (SBR)'s Information Technology (IT) systems to those of the (ONW) alliance's established members," the (ONW) alliance said in a statement. "Projects are also nearing completion to bring (SBR)'s various internal processes and procedures into line with the (ONW) alliance's requirements, and extensive employee training and communications programs are now underway at the (SBR) and the (ONW) alliance's existing members."

(ONW) alliance Managing Partner, John McCulloch added, "(SBR) will expand the (ONW) alliance's network substantially in a key region of growing travel demand, with a carrier that matches our demanding quality requirements, while enabling (SBR) to offer its customers a truly global network." (SBR) CEO, Vladimir Obyedkov noted that "becoming part of the (ONW) alliance will be one of the most significant steps in (SBR)'s history. It will also strengthen us financially through revenues from passengers transferring to our network from our (ONW) partners and the cost reduction opportunities the alliance offers."

December 2010: Moscow Domodedovo Airport (DME)'s operator, Eastline Group, has outlined a plan for further infrastructure improvements to expand its throughput capacity. Airport director, Vyacheslav Nekrasov says Eastline has earmarked Rb97 billion/$3.2 billion for building a new passenger terminal with a dedicated pier and parking garage by 2015. "The completed vision of the facility is designed to process up to 36 million passengers a year," he says, expecting (DME)'s throughput to grow +20% to 22.4 million this year.

Construction work is to be funded from Eastline's internal resources and through co-financing arrangements with the interested parties. The airport development program also envisages building an underground rail station, to switch from an above-ground station, and a third runway. Eastline is discussing options to finance these projects with the high-speed rail operator Aeroexpress and Russian transportation ministry respectively. "In each case, the initial drafting and cost evaluation have been done," says Nekrasov. "We hope both projects will be completed prior to the new terminal."

January 2011: S7 Airlines (SBR) a new Oneworld (ONW) alliance member, will fly from Novosibirsk in Siberia to Berlin, home of (ONW) aspirant Air Berlin (BER). Direct flights to Tegel airport will operate just once a week. Berlin’s new Brandenburg airport will open on the site of Schonefeld airport next year, at which time Tegel airport will close.

An explosion that occurred at Moscow Domodedovo Airport (DME) around 4:30 pm local time is believed to have killed at least 35 people and injured dozens of others. Russian President, Dmitry Medvedev said in televised remarks that evidence points to "a terror attack" at Russia's busiest airport, while USA President, Barack Obama condemned what he called an "outrageous act of terrorism." The blast detonated inside (DME)'s international arrivals hall, reportedly just outside customs clearance, where crowds were gathered awaiting arriving passengers who had claimed bags from flights arriving from around the world. Medvedev said he was forming a "task force" to immediately begin investigating "while the trail is still warm." He said a "special [security] regime" would be put in place at all Russian airports and other "large transport facilities," but did not specify details.

Even as first responders tended to the dead and wounded in the smoky (DME) arrivals hall, there appeared to be consensus that the explosion was caused by terrorism. Russian media widely reported that a suicide bomber was responsible, saying the explosion emitted shrapnel that added to the carnage.

President Obama issued a statement in which he described the explosion as a "premeditated attack against innocent civilians." (UN) Secretary General, Ban Ki-moon called it a "deplorable and unjustifiable act of violence against innocents." French President, Nicholas Sarkozy said it was a "barbaric and cowardly terrorist act." The blast appears to be the second major act of terrorism in the Moscow region in less than a year; the city's subway system was attacked last March by suicide bombings that left 40 dead.

It is unclear how airport security worldwide will be affected by the (DME) explosion, which occurred in a crowded area of the airport that can be accessed without passing through a security checkpoint. Minneapolis-St Paul International announced that it was increasing the police presence around the airport, particularly on the curbs outside its terminals and at the airport perimeter; it said it had not been asked to do so by the USA government.

SEE ATTACHED "AIRLINE BUSINESS" MAGAZINE INTERVIEW OF S7 AIRLINES (SBR) CEO - - "SBR-VLADI FILEV-2011-01-A/B/C/D/E."

February 2011: S7 Airlines (SBR) reached a code share agreement with British Airways (BAB), opening up joint flights from Russian regions via Moscow Domodedovo airport (DME) to London Heathrow airport (LHR) starting February 8.

June 2011: S7 Airlines (SBR), which once planned to operate 15 787s before cancelling its 787 Dreamliner order, is now firmly focused on building a narrow body-centric fleet, according to CEO, Vladislav Filev. Filev noted that (SBR)'s last A310 will leave its fleet shortly and its only two 767-300s are under evaluation for retirement. "We believe in [having an exclusively or near-exclusively] narrow body fleet" in the future, he said. (SBR) joined the Oneworld (ONW) Alliance last year.

In addition to the A310 and two 767-300s, (SBR) operates 19 A319s and nine A320s. (SBR) placed an order for 10 737-800s in 2006 to be operated by Globus Airlines (GLP), which flies under the S7 brand. Up to five airplanes from that order are expected to be in service this year.

Filev said he believes (SBR) will operate both A320 family airplanes and 737NGs in its future fleet. "We [S7 (SBR) subsidiary, Sibir Technics] are the biggest maintenance provider [for 737s and A320s] in the (CIS)," he pointed out. "We want to strengthen this position."

Filev said (SBR) is doing relatively well, given the difficult operating environment for commercial aviation in Europe and around the world. "We are in a quite solid position," he commented, adding that most of (SBR)'s growth will be generated within the Russian domestic market which "will become more important in the future."

He denied that (SBR) is interested in buying other Russian airlines. "The next two to three years, we are only interested in making cash," he said. Market conditions remain difficult, especially considering high fuel prices, necessitating that (SBR) focus its attention on increasing its own productivity, he stated.

(SBR) launched weekly A320 service between Khabarovsk and Beijing. (SBR) launched a weekly, Berlin Tegel - Novosibirsk service.

(SBR) is leasing three new A320-200s for eight years from Air Lease Corporation (ALE), which will be delivered in January, February and May 2012.

July 2011: Ukraine International Airlines (UKR) and Oneworld (ONW) alliance member, S7 Airlines (SBR) signed a partnership agreement under which (UKR) will launch thrice daily, Kiev - Moscow Domodedovo (DME) service, giving its passengers access to (SBR)'s network via (DME).

"S7 Airlines (SBR) [has] the largest network of domestic routes in Russia," (UKR) Corporate Press Secretary, Evgeniya Satska said. "Cooperation with such a powerful carrier will provide our passengers with more opportunities." (UKR) operates a fleet of 19 737 airplanes.

August 2011: Etihad Airways (EHD) and S7 Airlines (SBR) have expanded their code share agreement to include Kazan, Samara, Krasnodar, and St Petersburg.

Air Berlin (BER) and S7 (SBR) have extended their code share to cover 47 routes. New code share flights include Berlin Tegel (TXL) via Moscow Domodedovo (DME) and on to Irkutsk, Samara, Kazan, Perm, Ufa or Rostov, as well as Yekaterinburg. The code share also covers connections from Dusseldorf, Munich, Stuttgart, Frankfurt or Hanover.

Since the code share arrangement began in 2009, passenger volume has increased to 75% on the (DME) and (TXL) service. The proportion of transfer passengers exceeds >30%.

January 2012: S7 Airlines (SBR) will fly to Valencia in Spain, a Oneworld (ONW) Alliance market, courtesy of Iberia (IBE). (SBR) already flies to Madrid and Alicante.

(SBR) has introduced a variety of new routes:
Irkutsk - Yakutsk: weekly A320-200 service starting on June 8;
Khabarovsk - Hong Kong: weekly A320-200 service starting on March 30;
Khabarovsk - Magadan: weekly A320-200 service starting on March 29;
Moscow Domodedovo - Athens: weekly A319-100 service starting on May 26;
Moscow Domodedovo - Dubrovnik: weekly seasonal A319-100 service starting on June 7;
Moscow Domodedovo - Milan Orio al Serio: weekly seasonal A319-100 service has started on January 2;
Moscow Domodedovo - Minsk International 2: daily A319-100 service starting on March 26;
Moscow Domodedovo - Orenburg: daily 737-400 service starting on March 25 (operated by Globus (GLP));
Moscow Domodedovo - Turin: weekly seasonal A319-100 service has started on December 30;
Moscow Domodedovo - Valencia: weekly seasonal A319-100 service starting on June 2;
Novosibirsk - Phuket: weekly seasonal 767-300ER service has started on October 3;
Novosibirsk - Ulan - Ude: 2x weekly 737-800 service starting on June 16 (operated by (GLP);
Omsk - Beijing: 2x weekly A320-200 service starting on June 18;
Petropavlovsk - Kamchatsky - Beijing: weekly A320-200 service starting on June 23;
Ulan - Ude - Beijing: 2x weekly 737-800 service starting on June 16; (operated by (GLP));
Yakutsk - Beijing: 2x weekly A320-200 service starting on March 28.

It will not resume its seasonal, Moscow Domodedovo - Hanover route in 2012 and give up its routes from Moscow Domodedovo to Osh and Novosibirsk to Bishkek, Khudzhand and Osh by the end of March.

Russian aviation authorities have postponed implementing new regulations requiring all Russian airplanes with a maximum takeoff weight of more than >5,700 kilos to be equipped with a Traffic Collision Avoidance System (TCAS) and an Enhanced Ground Proximity Warning System (EGPWS). The new rules, which were to take effect January 1, were delayed because Russian Prime Minister, Vladimir Putin said during his December trip to the Russian Far East that carriers were not prepared for it.

Airline experts say that regional carriers will suffer the most from the new regulations because the cost of the new equipment, including installation, is estimated to be RUR 6 - 10 million/$192,000 - $320,000) per airplane. It is not profitable to install it on old Tupolev Tu-134s and Antonov An-24s, the base of most Russian regional airlines’ fleet. Some carriers have announced plans to significantly reduce their Soviet-built fleets.

At the end of 2011, authorities changed the minimum requirements to receive an Air Operator’s Certificate (AOC) from 10 to eight airplanes with more than >55 seats, although there is still a possibility the minimum will increase to 20 airplanes. Local authorities believe this measure should improve aviation safety.

February 2012: The S7 (SBR) Group, which includes S7 (SBR) and Globus (GLP), carried 6.6 million passengers in 2011, up +11.4% on the year-ago period. The number of flights increased +11.5% to 61,464.

The group did not disclose the exact numbers for each carrier but the Russian Ministry of Transport stated on its website that (SBR) in 2011 carried 5.13 million passengers, up +6.1% year-over-year. (GLP) carried 1.47 million passengers, up +34.7% from 2010.

(SBR) Director Strategy, Vadim Besperstov said last year’s numbers met (SBR)'s forecasts and was the result of fleet expansion. “Last spring, (SBR) received two brand new 737-800s,” he said.

In 2012, (SBR) Group carriers will expand their fleets with six A320s. Last year, (SBR) Group (CEO), Vladislav Filev said the airlines will operate a fleet of mixed 737s/A320s narrow bodies.

The (SBR) Group has one of the biggest domestic networks in Russia with bases at (DME), (OVB) and Irkutsk (IKT).

(SBR) will launch A320 2X-weekly, Vladivostok - Tokyo Narita (NRT) service on March 27. It will also begin A320 2Xweekly, Khabarovsk - (NRT) flights on March 26.

Last year, the (SBR) group created a Maintenance Repair & Overhaul (MRO) subsidiary, comprising (SBR) Engineering and Domodedovo Technic Company at Moscow Domodedovo (DME), and Sibir Technics at Novosibirsk Tolmachevo (OVB). The providers perform "C" maintenance checks on A320s and 737 Classic and NG services.

In 2010, (SBR) Group carriers joined the Oneworld (ONW) Alliance and last year combined their loyalty programs.

Russian airlines carried 64.1 million passengers in 2011, a +12.6% increase over 2010. International passengers rose +13.2% to 31.4 million; domestic passengers increased +12% to 32.7 million.

Aeroflot (SU) carried the most passengers, at 14.2 million, up +25.6%. Transaero Airlines (TRX) carried 8.5 million passengers, up +27.2% year-over-year. UTair (TYU) reported 5.8 million passengers carried, up +31.3%. S7 (SBR) Group, which includes Sibir (SBR) and Globus (GLP), carried 6.6 million passengers in 2011, up +11.4%. Rossiya Airlines (SDM), which will soon be part of the (ARO) group, carried 3.5 million passengers. The overall share of the market’s five biggest airlines increased from 53.1% to 57.9%.

Despite stable growth and positive passenger numbers in the Russian market, experts say the overall airline economy in Russia deteriorated in 2011. Load factor decreased one point to 77.2% LF. Load factor on international routes fell -0.7 point to 81.1% LF.

The number of Russian carriers decreased from nearly 160 to 126. In 2011, Russian aviation authorities withdrew 37 air operators’ certificates (AOC), including Avianova (ANV) and Sky Express (SEX).

Vladivostok Airport (VVO) in the Russian Far East will gain "open skies" status in June, Moscow Sheremetyevo Airport (SVO) (CEO), Mikhail Vasilenko said. This will enable new carriers to pick up and drop off passengers and cargo without bilateral agreements.

(SVO), which owns a 52.1% share in (VVO), is one of the investors in the $190 million terminal and aerodrome infrastructure renovation set to open in March. The terminal, which will initially accommodate 3.5 million passengers, was revamped for the Asia/Pacific Economic Cooperation (APEC) Summit, taking place September. In the future, terminal capacity could reach 5 million passengers.

According to market experts, the open skies agreement will attract new carriers and more passengers, enabling (VVO) to get a return on its investment.

Vasilenko said Korean Air (KAL) and S7 Airlines (SBR) will also launch flights from (VVO) and Khabarovsk to Tokyo. In 2011, (VVO) handled 1.46 million passengers, which Vasilenko expects will increase to 1.85 million in 2012.

Russian and Bulgarian civil aviation authorities have agreed to double frequencies on Burgas (BOJ) – Moscow and Varna (VAR) – Moscow routes.

According to the Russian Ministry of Transport, the designated carriers of each country will be able to operate 14 scheduled flights per week between these destinations. The countries will add one more carrier to each destination, which is currently served by Russia’s S7 Airlines (SBR) and Bulgaria Air (LZB).

Russian authorities did not disclose which airline would be the second carrier from the Russian side. (SBR) also refused to comment, but representatives said they were using all possible frequencies operating daily flights on the routes.

Russian authorities have allowed (LZB) to launch Moscow Sheremetyevo (SVO) - (VAR) - (BOJ) service from June 1 to September 1. This summer, other carriers will not have to submit their flights to these destinations for approval, according to the Russian Ministry of Transport. This requirement, which became effective in 2010, has become an obstacle for (LZB), which wanted to launch charter flights from (BOJ) and (VAR) to Novosibirsk (OVB). (SBR) was a designated carrier on these routes and did not permit (LZB) to operate charter flights.

March 2012: The S7 (SBR) Group will announce its regional network development strategy at the end of the year, S7 (SBR) Group (CEO), Vladislav Filev said. The S7 Group includes Sibir (SBR) and Globus (GLP).

According to Filev, (SBR) is considering the 10- to 70-seat Bombardier CRJ or ATR airplane, and will decide which airplane is a better fit for the Maintenance Repair & Overhaul (MRO) and operating infrastructure in Russia.

(SBR) and (GLP) will choose either Tolmachevo (OVB) in Novosibirsk or Moscow Domodedovo (DME) as bases.

(SBR) operates 20 A319s, 11 A320s, one A310 and two 767-200s. (GLP) has four 737-400s and six 737-800s.

In 2012, (SBR) Group carriers will expand their fleets with six A320s.

April 2012: S7 Airlines (SBR) is planning to launch regional services from Moscow Domodedovo International airport (DME) and Novosibirsk Tolmachevo airport (OVB) as of next year, with either 10 ATR72-600s or CRJ-700s.

Russian and French aviation authorities have agreed to designate a second airline from each country to operate 7X-weekly services on the Paris Orly (ORY) - Moscow route.

According to Russia’s Kommersant newspaper, France may choose French Aigle Azur (AZU) as the second designated carrier for (ORY) - Moscow service; in Russia, S7 Airlines (SBR) and Transaero (TRX) will compete for the new routes.

Over the past several years, industry experts have warned that Russia’s Aeroflot (ARO) and AirFrance (AFA) have monopolized the high-demand Moscow to Paris route. The carriers, which are both SkyTeam (STM) Alliance members, have a code share agreement.

Earlier this year, airlines lobbied for the same changes to the Russia - Italy bilateral agreement.

May 2012: The Russian Federal Air Transport Agency, Rosaviatsia announced it will spend RUB219.4 million/$7.2 million to subsidize five carriers that service Kaliningrad (KGD) – Moscow and (KGD) – St Petersburg routes. The program runs through September 15.

Aviation authorities signed contracts with five carriers that take part in the program (Aeroflot (ARO), Rossiya Airline (SDM), S7 Airlines (SBR), UTAir (TYU) and Ak Bars Aero.

Last year, the government spent RUB138 million to subsidize these routes.

Kaliningrad is a Russian exclave situated on the west of the country and does not border the main territory. It is surrounded by Poland and Lithuania.

Russia’s S7 Airlines (SBR), which includes Sibir (S7) (SBR) and Globus (GLP), took delivery of a new 737-800 from International Finance Leasing Company (ILFC) (ILF). The Moscow Domodedovo airport (DME)-based airplane, painted in (GLP) livery, features a 162-seat, two-class cabin layout.

The new 737-800 is the seventh 737-800 in the airlines’ fleet. In June, (SBR) and (GLP) will take delivery of two more of the type.

June 2012: S7 Airlines (SBR) launched two new routes to the Chinese capital Beijing (PEK). On 16 June, (SBR) began operating twice weekly from Novosibirsk (OVB), its home base and Siberia’s largest city, via Ulan-Ude (UUD) near the border to Mongolia, using 160-seat 737-800 airplanes. Competition on the first, domestic sector comes from RusLine’s also two flights a week. On 18 June, (SBR) began flying from Omsk (OMS) to the Chinese capital, also twice-weekly, but with A319 airplanes. (SBR) now operates in total 10 routes to Beijing.

S7 Airlines (SBR), which includes Sibir (SBR) and Globus (GLB), is evaluating whether to phase out its two 767-300ERs within the next two years.

(SBR) Deputy (CEO), Anton Eremin said that (SBR) is “very much focused” on a narrow body fleet. “The 767s are a niche airplane for us . . . Our A320 fleet operates 15 hours per day, one of the highest utilization in the industry.”

However, Eremin said, “There are many more opportunities for us in Russia, as well to new European destinations like Spain or Italy,” adding that the group’s airlines carried about 6.6 million passengers last year. “In the past, we had every year a growth rate of +15% in terms of passengers. But we also had been hit from the crises late last year. In 2011, the passenger numbers were up +11.4% on the year-ago period, which were much better than some other European carriers,” he said.

Oneworld (ONW) Alliance member (SBR) holds a market share of 15% in Russia. “There is much more potential for us,” he said, adding that (SBR) has six A320s and three 737-800s in the pipeline for delivery.

“Besides our hubs in Moscow Domodedovo and Novosibirsk, a third hub is not in the plan now. However, besides Russian domestic [routes], we see growth opportunities especially in the leisure business from secondary cities in Russia to international holiday destinations,” Eremin said.

(SBR) group’s fleet operates 48 airplanes, comprising 20 A319s, 14 A320s, one A310, two 767-300s, four 737-400 and seven 737-800s. The average fleet age is eight years.

The Russian Ministry of Transport has amended its Air Code, allowing carriers to introduce non-refundable tickets. Currently, Russian airlines have to pay 8% in refunds to passengers who cancel their flights 24 hrs before the flight. In 2010, the refunds amounted to RUB22.7 billion/$700,000.

Russian authorities said foreign carriers operating scheduled flights to Russia sell nonrefundable tickets, which allows them to offer sales with lower prices, giving an unfair advantage over Russian carriers on international routes.

The Ministry said the nonrefundable rates will increase population mobility, which is 9.3 times lower than in the USA and 2.9 times lower than in Russia in 1990.

July 2012: S7 Airlines (SBR) will launch 2X-weekly, Novosibirsk - Hong Kong 737-800 service on October 29.

August 2012: S7 Airlines (SBR) will launch 3X-weekly, Moscow - Verona 737-800 service on December 26.

October 2012: Russia’s aviation authorities will allow local carriers to employ foreign pilots (FC), as it deals with a rising shortage of qualified pilots (FC) in a fast-growing airline market.

Speaking at the "Wings of Russia" forum, Deputy Minister of Transport, Valery Okulov said the changes, which will be written as air code and migration legislation, will be published on the Ministry of Transport website soon. Authorities did not specify when it will implement the changes.

Until now, only Russian citizens can be pilots (FC) with local carriers, according to Russia’s air code. Okulov said the government will invest Rub250 million/$8 million in pilot (FC) training.

S7 (SBR) added services on the 4,500 km route from Russia’s third-most populous city, Novosibirsk (OVB), to Hong Kong (HKG), which it already serves from two destinations in the Russian Far East, Khabarovsk, and Vladivostok. Twice-weekly flights from the Siberian city are now offered and will be operated with 737-800s by (SBR)’s subsidiary, Globus Airlines (GLP) (GLP).

Russian and Czech aviation authorities have signed a new air service agreement (ASA) and added one more designated carrier from each country on the Moscow - Prague route.

According to a memorandum of understanding (MOU) concluded by the countries' aviation authorities this September, the new document will be signed in 2013. It was decided that from the date of signature of the new (ASA), each country may designate a second airline to operate scheduled services on the Moscow - Prague route with up to seven weekly frequencies. Now only Russian Aeroflot (ARO) and Czech Airlines (CSA) can perform the flights between these cities. Both of the carriers are SkyTeam (STM) alliance members.

Authorities of both countries also agreed that if they fail to sign the new agreement by September 1, 2013 they will hold a consultation by September 15, 2013 to review the status of internal procedure relating to the new agreement and to designate the second airline from each side.

Market experts say that the countries will not sign the agreement before September 1, 2013 because the document needs approvals from different organizations, including the Russian Ministry of Foreign Affairs. The second designated carrier is therefore unlikely to start earlier than the fall of 2013.

Russia’s main carriers, including Transaero (TRX), S7 Airlines (SBR) and UTair (TYU), are expected to apply for the rights for the Moscow - Prague route. On the Czech side, Smart Wings (TVS) is expected to apply.

November 2012: S7 Airlines (SBR) launches Novosibirsk - Hong Kong. (SBR) then added flights from its main hub in Novosibirsk (OVB) in Siberia to Kulob (TJU), making it the third destination that it serves in Tajikistan after Dushanbe and Khudzhand. In addition, also on 3 November, S7 (SBR) launched a new route from Novosibirsk to Fergana (FEG) in southern Uzbekistan. This is also (SBR)’s third route to the country from Novosibirsk after its existing flights to Tashkent and Namangan. Weekly flights are offered on both routes, all of which will be operated with A320s.

(SBR) has joined the International Air Carrier Association (IACA) as a full member. (SBR) has the largest route network within Russia.

Russian airlines carried 57 million passengers during the first nine months of the year, up +15.2% over the year-ago period, Russian Federal Air Transport Agency/Rosaviatsia said.

International traffic rose +22.2% to 29.9 million passengers and domestic traffic increased +8.3% to 27 million. Load factor was 79.4% LF, up +1.6 points year-over-year. The total market share of Russia’s five biggest airlines increased to 62.4% from 56.4%.

Russia’s biggest airline, Aeroflot (ARO), carried 13.3 million passengers, up +26.1% over the year-ago period. Transaero Airlines (TRX) carried 8.07 million passengers, up +23.1%. UTair (TYU) carried 5.9 million passengers, up +43.1%. Sibir (SBR), which is working under the S7 Airlines (SBR) brand, said it transported 4.8 million passengers, up +24.3%. St Petersburg-based, Rossiya (SDM) reported carrying 3.36 million passengers, up +23.9%.

(TRX) launched weekly 737 services from Moscow Vnukovo to Astana (TSE) and Almaty (ALA) on November 2. (TRX) also operates daily, Moscow Domodedovo (DME) - (TSE) and (DME) - (ALA) 737 and 767 services.

February 2013: Russia’s aviation authorities have announced they will permit 200 foreign Captains (FC) and instructors to work for local airlines over the next five years.

Russia’s Ministry of Transport has prepared amendments for its air code that will allow Russian airlines to hire foreign pilots (FC). Those changes are being discussed by other Ministries and Government Departments that would be involved or affected by the change, Mikhail Gubanov, a representative of Federal Air Transport Agency, Rosaviatsia told an aviation conference in Moscow.

Gubanov said attracting Captains and instructors from other countries was necessary because of a pilot (FC) shortage in Russia. The possibility for a change in law was first raised last year.

January 2013: S7 (SBR) resumed services from Novosibirsk (OVD) to Munich (MUC) on 23 December following a break of eight years. The 1,500 km route between the industrial center of Siberia and the capital of German Bavaria now operates with weekly frequencies using (SBR)’s 160Y-seat 737-800. In addition, (SBR) also expanded its Moscow Domodedovo (DME) network, as it launched thrice-weekly services to Verona (VRN) in northern Italy on 26 December. Indirect competition to this market comes from Yakutia Airlines (SYL), which serves Verona twice-weekly from Moscow Vnukovo until 26 January.

Japan Airlines (JAL) and S7 Airlines (SBR) entered a code share agreement under which (JAL) will place its code on (SBR) service from Tokyo Narita to Khabarovsk (weekly) and Vladivostok (2X-weekly) beginning January 30. (SBR) will begin placing its code on (JAL)-operated flights between Narita and domestic points in Japan beginning February 15.

April 2013: The Russian government will split 25.5% of shares in Sibir Airlines (SBR), which flies under the S7 Airlines brand. Alfa-bank, which oversees the transaction, valued the government’s stake at RUB1.12 billion/$35.7 million. Bids will be accepted until April 18; the tender will be conducted April 25.

The government has been trying to sell the 25.5% stake in Sibir Airlines (SBR) since 2001, but all auctions failed due to lack of interest. Experts now say there is a chance the stake will get a new owner. Possible buyers include Oneworld (ONW) Alliance members, Middle East Airlines (MEA) or owners, Vladislav and Natalya Filev.

Sibir (SBR) is the fourth largest international airline in Russia. In 2012, it carried 6.4 million passengers, up +23.8% up year-over-year. After the 2008 world economic crisis, (SBR) slowed its growth significantly and lost its second position in Russia’s largest airlines ratings.

S7 Airlines (SBR) also includes Globus Airlines (GLP), which carried 1.9 million passengers in 2012, a +32% increase over 2011. (SBR) joined the (ONW) alliance in November 2010.

(SBR) started operations on its only Greek route so far this summer, as it launched services connecting Moscow Domodedovo (DME) and Athens (ATH) on 27 April. Twice-weekly A319-operated flights are initially offered on the route by the Oneworld (ONW) Alliance carrier in competition with Star (SAL) Alliance member, Aegean Airlines (CRM)’s five weekly frequencies; this will be then reduced to weekly, effective on 13 October.

May 2013: Novosibirsk Airport, Russia’s largest airport east of the Urals is situated at the crossroads of major transit routes between Europe and Asia, so it shouldn’t come as a surprise that the airport focuses on attracting major global cargo freighters for technical stops as well as the development of passenger traffic. The latter seems to be working out well (in the first four months of 2013, passenger numbers are up by +4.5% for domestic and perhaps more tellingly) by 32.4% for international traffic, as compared to the same period the year before. Gregory Pomerantsev, the airport’s Commercial Director, commented: “Using an attractive mix of incentives and marketing support helps us to attract new airlines and we expect to close 2013 with 3.7 million passengers.”

A total of 3.27 million passengers travelled through Novosibirsk Airport in 2012, an increase of +20.7% compared to 2011 and more than twice as many than a decade ago. While domestic traffic is still very important for the business, with 62% of the airport’s passengers travelling within Russia in 2012 (down to 57% in the first four months of 2013), this is down significantly from the 79% share of Novosibirsk’s traffic that domestic flying had in 2003.

SEE ATTACHED - - "SBR-2013-05 - NOVOSIBIRSK PASSENGERS."

Airlines searching for new international routes into Russia and wanting to bypass Moscow seem to be making Novosibirsk the winner ( international traffic was up by +56.6% in 2010, +44.7% in 2011 and +25.9% in 2012). This is of course not to say, that the results for domestic growth were disappointing, as they hovered between +8.7% and +17.7% in that period.

Moreover, analysis of the airport’s monthly traffic figures shows a considerable flattening of demand between 2011 and 2012, improving from “good” (6.5) in 2011 to “excellent” (4.5) a year later.

S7 Airlines (SBR), Novosibirsk’s based airline, is also the largest carrier operating at the airport. Now, (SBR) commands just under a third (31%) of domestic and half of international (49%) weekly seat capacity at the airport.

(SBR)'s expansion of its Novosibirsk hub creates new opportunities for the airport and becoming a full-blown transfer airport is one of them, according to "Pomerantsev:" “In 2012, transfer traffic increased by more than +31% compared to the year before, mainly on Central Asian and Siberian routes, and during the first four months of 2013, the growth of transfer flows exceeded +70%.” With investments in the terminal and apron infrastructure already in the pipeline for 2013 - 2014, the airport is planning to reach up to half a million transfer passengers in 2015, a substantial increase on the 126,000 handled in 2012.

Flights to a total of 33 international destinations are available from Novosibirsk Airport in June 2013. Given its geographical location in the center of Eurasia, the airport’s main target markets are fairly balanced between Europe, South East Asia and (CIS) destinations, and this shows in the airport’s route network. The largest destination in terms of average weekly capacity is Bishkek, followed by Beijing and Kiev Borispol (an ex-AeroSvit (UKA) route currently operated by Ukraine International Airlines (UKR)). While the Kyrgyz capital, Bishkek, is offered by a selection of four airlines, the 3,000 km route to Beijing is served only by S7 Airlines (SBR). "Pomerantsev" notes: “The route’s high potential is not fully explored and attracting a Chinese carrier is high on the priority list.”

Year-round European destinations are represented by Frankfurt (S7 (SBR): 1 weekly service), Munich ((SBR): 1), Prague ((SBR): 2), Düsseldorf (Orenair: 2) and Barcelona (Transaero Airlines (TRX): 2). According to the airport’s Commercial Director, high levels of Europe-bound transfer traffic via Moscow help strengthen the case for Novosibirsk: “Many passengers use the Moscow hub for travelling to and from Novosibirsk, taking advantage of the 14 to 19 daily flights on offer. With this in mind, we are working hard to attract carriers from Northern Europe (Helsinki and Stockholm), ensure direct connection with Italy (Milan), increased frequencies on existing German routes and possibly launch new ones (Berlin, Hamburg or Hannover).” In fact, the latter destination was operated by S7 (SBR) with weekly frequencies between June and September last year.

The S7 Group won the bid for a 25.5% stake in Sibir Airlines, according to Alfa-bank, which is overseeing the transaction. The S7 Group offered RUB1.13 billion/$35.6 million for the stake, +1% more than the starting price. The S7 group had already owned a 71.3% stake in Sibir. The Russian government has 45 days to approve the deal. The tender was originally planned for April 25, but was postponed. The government has been trying to sell its 25.5% stake in Sibir Airlines, but all auctions failed.

June 2013: International Lease Finance Corporation (ILFC) subsidiary, AeroTurbine (AUB) has signed a consignment material stock agreement with Engineering Holding, which does Maintenance and supplies parts for western airplanes in Russia and is the parent of S7 (SBR) Engineering and Sibir Technics.

July 2013: The Russian government has approved a 25.5% stake sale in Sibir Airlines (SBR) to the S7 Group, which already owns a 71.3% stake in the carrier. S7 (SBR) won the bid at the end of May, but the deal was subject to approval by the Russian government.

The group offered RUB1.13 billion/$35.6 million for the stake, +1% more than the asking price. According to a government statement, S7’s Globus Airline (GLP) and Transaero Airlines (TRX) were also interested in buying the Sibir stake. “The deal will provide the favorable development for Sibir Airlines (SBR).” Sibir Airlines (SBR) is the fourth largest airline in Russia.

August 2013: During the International Aviation & Space Salon (MAKS)-2013, Airbus (EDS) and S7 (SBR) Engineering, part of Engineering Holding, signed an agreement to develop long term maintenance partnership in the region. As part of this, S7 (SBR) Engineering, a leading maintenance & repair facility in Russia, will acquire Airbus (EDS) Training skills and standards to provide Original Equipment Manufacturer (OEM)-backed maintenance training capabilities for its personnel and for A320 Family operators in the region. Additionally, this partnership will leverage (EDS)’ latest technology training media and tailor the syllabus for the Russian environment and local language.

The scope of the agreement covers the following:

* Complete standardization of S7 (SBR) Engineering’s instructors and quality processes to enable their integration into (EDS)’ Maintenance Training organization exposure;
* Deployment of Airbus (EDS) Competence Training equipped with innovative digital tools, ensuring active learning in virtual airplane environment;
* Delivery of Airbus (EDS) type rating and specialized courses;
* Applying Airbus (EDS)’ optimized standards of course ware, curriculum and examinations.

Vladimir Perekrestov, General Director, Engineering Holding said “We are pleased to develop this partnership with Airbus (EDS). Engineering Holding’s companies have more than >50 years’ experience in airplane maintenance and repair. The company is increasing production and number of specialists annually. This partnership will allow us initially to acquire Airbus (EDS)’ standards and skills and later to conduct maintenance training for the company’s specialists and also for Russian airlines in their own language to Airbus (EDS)’ standards.”

Engineering Holding is the largest independent (MRO) provider in Russia and the (CIS) delivering maintenance services for the Western- and Russian-built airplanes. Its heavy maintenance facilities are located in Moscow, Mineralnye Vody, and Novosibirsk. The company’s Line Maintenance station network is constantly expanding and currently consists of stations in Irkutsk, Krasnoyarsk, and Vladivostok. The organization provides Line Maintenance services for more than >40 Russian airlines and more than >20 foreign operators.

Moscow Sheremetyevo Airport has announced a tender for investors to take part in the reconstruction of its northern terminals. Deadline for applications is August 26. The airport plans to create a new complex to accommodate up to 40 million passengers per year. The renovation should start with Terminal B and will increase capacity to 10 million passengers per year after the first phase.

The airport also plans to build a tunnel between the northern and southern terminals, which are now separated by runways. Earlier this year, Sheremetyevo (CEO), Mikhail Vasilenko said the cost of the new projects will total as much as $370 million. Vasilenko said the lack of connections between the terminals has compromised the airport’s ability to handle connecting flights.

Sheremetyevo’s northern part includes terminals A, B and C. Terminal A is new for business aviation. Terminal B is former Sheremetyevo 1, the oldest terminal that needs the most significant renovation. Russia’s low-cost carrier (LCC) Avianova (ANV) operated from Terminal B and was its biggest partner. After (ANV) left the market in 2011, the terminal lost all its smaller partners. Terminal C was built at the beginning of the decade, and is mainly used for charter airlines and some scheduled services.

Moscow Sheremetyevo Airport has said four companies have applied for the tender to finance the reconstruction of its northern terminals.
According to (CEO), Mikhail Vasilenko, the companies include (VTB) Capital Company, Oleg Deripaska’s Transstroy Corporation, Arkady Rotenberg’s (TPS) Avia Group and Airport Koltsovo.

Sheremetyevo, which announced the tender in the middle of August, had planned to reveal the results on September 17 but has postponed the deadline to September 25. The airport plans to create a new complex to accommodate up to 40 million passengers per year. The renovation should start with Terminal B and will increase capacity to 10 million passengers per year after the first phase.

The airport also plans to build a tunnel between the northern and southern terminals, which are now separated by runways. The cost of the new projects will total as much as $370 million.

Sheremetyevo, the second biggest airport in Moscow after Domodedovo, handled 13.4 million passengers during the first six months of 2013.

September 2013: The absence of an established maintenance network is a “major reason” why (S7) (SBR) has shied away from adding the Sukhoi Superjet model SSJ100 to its Western-built fleet. “We expect the manufacturer to provide us with a maintenance network for all the airports that we operate,” said Vadim Besperstov, Deputy (CEO) Strategy, the S7 Group.

“From a transition and viability point of view, we are not ready to be a launch customer for new equipment,” he says. Besperstov admits (S7) established the maintenance networks for Airbus (EDS) and Boeing (TBC) because it was “one of the first operators in the country”.

“But to do it again, for a new airplane, would be very costly, and we cannot do this with our own money,” he said. In that sense, he said S7’s “mentality” is very close to that of a low-cost carrier (LCC) even though (SBR) operates as more of a traditional carrier.

November 2013: S7 Airlines (SBR) continued to build up its presence in the market from Siberia to Hong Kong (HKG), as it launched its fourth route to the south-eastern Asian metropolis on November 3rd. (SBR), which already offers thrice-weekly schedule to Hong Kong from Vladivostok and twice-weekly from both Khabarovsk and Novosibirsk, added weekly frequencies from Irkutsk (IKT) to its offering. The 3,400 km route is operated using A320s and (SBR) is the sole operator.

A321-211 (2076, VQ-BQU), ferried Ostrava - Moscow (DME) after painting.

January 2014: Fokker Services has agreed with Russia’s Maintenance Repair & Overhaul (MRO) Sibir (SBR) Technics to support their (EASA) Design Organization Approval capabilities. Sibir (SBR) has applied for (EASA) 21J approval to certify minor modifications, allowing it to offer a broader range of services. Fokker will support Sibir (SBR) in obtaining the (EASA) (DOA) by training Engineering (MT) staff and providing compliance verification capabilities.

March 2014: S7 Airlines (SBR) has been designated as the second carrier for Moscow to Larnaca and Paphos routes beginning in (IATA)’s summer season 2014.

Japan Airlines (JAL) and Russia’s S7 Airlines (SBR) have agreed to a code share that will see (JAL) add its code to S7 (SBR) flights on 12 new destinations in Russia from March 19.

These include routes between Moscow Domodedovo and Russian domestic destinations including Saint Petersburg and Sochi. With the move, (JAL) has extended its reach into what were previously considered marginal markets across the central Asian/Russian region.

Domodedovo-based S7 Airlines (SBR) flies to 45 regional destinations across Russia, with connections to European, Asian and Middle East destinations in 20 countries.

This move positions (JAL) as an important player on Japan - Central Asian routes. This is underlined by the relative lack of code share connections with Russian airlines by Japanese competitors, including All Nippon Airways (ANA).

Other significant Asian players (such as Korean Air (KAL), China Airlines (CHI) and Asiana Airlines (AAR)) have already established similar routings and code shares with airlines including Aeroflot (ARO), Transaero (TRX), and Rossiya (SDM).

However, mining, natural resources extraction and (O&G) supply systems are all driving traffic across the borders between Asia and Russia/Eastern Europe. This has seen business expanding rapidly and the need for extra connectivity, according to the European Union (EU). “Central Asia has significant development and business potential based on availability of energy, natural resources and work force,” it said in a report on the region. However, the (EU) cautions over “major challenges linked to the heritage of a centrally planned system, legal and institutional reforms [and] limited regional integration” have meant that investing directly in the region sometimes gave pause to Japanese carriers looking at new routes. As a result, many operators (like (JAL)) are playing safe with a “kind of extended local, or extended regional customer market,” as Air Astana (AKZ) President, Peter Foster described the region’s current networks.

However, given a potential market of millions of new wealthy travelers, many looking for Asian tourism destinations and connections, this Russia - Asia trend looks increasingly likely to continue.

Finnair (FIN) and (S7) Airlines (SBR) will begin code sharing April 26 on services between Helsinki and Moscow’s Domodedovo International Airport, as well as to selected onward (S7) (SBR) services from Domodedovo to Novosibirsk, Kazan, Rostov-on-Don, Samara, Ufa, and Yekaterinburg.

In return, (S7) (SBR) will add its flight code to selected Finnair (FIN) services from St Petersburg and Yekaturinburg to Helsinki, and to selected onward Finnair (FIN) services to Joensuu, Kuopio, Oulu, Rovaniemi, Tampere, Turku, and Vaasa.

April 2014: Air Transport World reports that (S7) Airlines (SBR) is evaluating a future narrow body fleet as (SBR) continues to grow in its home market, with passenger boardings up +13% year-over-year. A photo was provided of (S7) Airlines (SBR) Chief Executive Officer (CEO) Anton Eremin - - SEE ATTACHED PHOTO.

(S7) Airlines (SBR) has taken delivery of its 1st sharklet-equipped Airbus A320. The A320, which can accommodate 158 passengers in 2-class configuration, is leased with (SMBC) Aviation Capital. (SBR) plans to take delivery of its 2nd A320 this year.

Aeroflot (ARO) and UTair (TYU) were the 1st carriers in Russia to receive sharklet-equipped A320s, but S7 (SBR) will be the 1st carrier to renovate its existing airplanes, modernizing its A320 fleet. The work will be performed by S7 (SBR) Engineering.

(S7) Airlines (SBR) added Airbus airplanes to its fleet in 2004; its fleet includes 20 A319s, 17 A320s and 4 A321s.

May 2014: (S7) Airlines (SBR) has further strengthened its ties within the Oneworld (ONW) alliance, following the start of daily services between Moscow Domodedovo (DME) and Helsinki (HEL) on April 26th. The A319-operated route will face no direct competition, though (ONW) alliance partner Finnair (FIN) operates (9x-weekly) from the Finnish capital into Moscow Sheremetyevo, with Aeroflot (ARO) additionally linking the same airport pair on a daily basis. (S7) (SBR) also commenced 2 new routes to Cyprus from Domodedovo, beginning daily services to Larnaca (LCA) on April 25th and 3x-weekly services to Paphos (PFO) on April 26th. While both services will be flown by (SBR)’s 166-seat 737-800s, only the 2,335 km sector to Paphos will endure direct competition, provided by Transaero Airlines (TRX), with its own 6x-weekly operations.

August 2014: 737-8GJ (41399, VQ-BVL), ex-(VT-SZL), (BOC) Aviation (SIL) leased.

November 2014: News Item A-1: (S7) Airlines (SBR), a Oneworld (ONW) Alliance carrier, has launched daily domestic operations to Voronezh (VOZ) from its Moscow Domodedovo (DME) hub (and the world’s 50th busiest airport). Commenced on November 10th, the 425 km city pair will face direct competition from RusLine and Polet Airlines (PLT), which offer 23 and 21 weekly services, respectively. In addition, UTair (TYU) also flies 3x-daily between Moscow Vnukovo and Voronezh. (S7) (SBR) will utilize its 128-seat A319s on the sector.


News Item A-2: Russia’s Federal Air Transport Agency, Rosaviatsia, said the government has spent RUB3.5 billion/$74 million for regional routes and Kaliningrad routes subsidy programs so far this year.

According to statistics for the 1st 10 months of 2014, 18 Russian airlines carried 460,000 passengers and operated 10,000 flights. The program includes 94 regional routes.

The government planned to spend up to RUB3.58 billion during the year.

Another subsidy program (flights between Kaliningrad and the country’s main territory) ran from May 15 through October 15, 2014. According to the Rosaviatsia, six airlines carried 220,000 passengers from Kaliningrad, up +14% year-over-year. The government, which had planned to spend RUB468.4 million on the program, used the entire amount.

February 2015: Russia’s international traffic was down -15.3% in January, while the number of domestic passengers grew +18.2%.

According to Russia’s Federal Air Transport Agency, Rosaviatsia, all airlines carried 5.8 million passengers in January, up +0.2% year-over-year. The decrease in international traffic is due to the change of currency exchange rates, which are expected to continue falling during the year.

Russia’s charter carrier, Nordwind (NWD) carried 132,211 passengers, down -48% year-over-year.

UTair (TYU), Russia's fourth biggest airline, carried 395,818 passengers, down -29.3%. (TYU) faced difficulties at the end of the year; its subsidiary UTair Finance entered into technical default on bonds last November.

Transaero (TRX) carried 786,568, down -3.8% year-over-year. S7 Airlines (SBR) is down -2.6% to 538,216 passengers, but Globus Airline (GLP), a second member of the S7 (SBR) Group, carried 178,998 passengers, up +39.7% year-over-year.

Aeroflot (ARO), Russia's biggest airline, carried 1.8 million passengers, up +14.1% over a year ago. A member of the Aeroflot (ARO) Group, Saint Petersburg-based Rossiya (SDM), grew +27.2% to 379,310 passengers.

March 2015: News Item A-1: (S7) Airlines (SBR) is set to launch Airbus A320 services from Surgut to Novosibirsk, Ufa, and Samara. (SBR) will start 3x-weekly, Novosibirsk - Surgut and 2x-weekly, Samara - Surgut services April 28, and Surgut - Ufa weekly service April 30.

Currently, (SBR) does not operate flights to Surgut, which is in 1 of the main oil-producing regions in Russia.

In 2012, (SBR) launched Moscow Domodedovo - Surgut service, but later stopped flights. According to market experts, the decision could be influenced by tough competition with Surgut-based UTair Airline (TYU). (TYU) is currently reducing its fleet and the number of destinations due to financial difficulties.

Novosibirsk-based (S7) (SBR) plans to attract transfer passengers from its base city to Ufa and Samara via Surgut. (SBR) will operate flights from Novosibirsk via Surgut to Ufa and Samara with 1 airplane. This move will allow it to reduce the number transfer passengers going via Moscow and develop other transfer routes in the country. It will also reduce the flight time for regional passengers.

Because of the peculiarities of the Russian airline market, most transfer routes connect via Moscow, which is not convenient for the passengers in Siberia and Russian Far East.

(S7) Airlines (SBR) is a member of the (S7) Group that also includes Globus Airline (GLP). In 2014, group members carried 10.06 million passengers, up +9% year-over-year.

News Item A-2: The Russian government will invest RUB350/$5.7 billion in the country’s airport infrastructure from 2015 - 2020. Russia’s Ministry of Transport, Maxim Sokolov said the investment will enable the reconstruction and construction of new runways at 147 airports (nearly half the airports in the country).

In 2014, 5 airports at Lipetsk, Vladikavkaz, Makhachkala, Nikolayevsk on Amur and Palana were totally reconstructed or built, according to Russia’s Federal Air Transport Agency, Rosaviatsia.

Taxiways and platforms were renewed at 4 airports in Abakan, Voronezh, Petropavlovsk-Kamchatsky, and Samara. In addition, a new airport at Iturup Island in the Russian Far East was built and opened in 2014. Construction began on the new Yuzhny International Airport at Rostov-on-Don in 2014. Airfield reconstruction at Petropavlovsk-Kamchatsky and Krasnodar will be finished and new runways will be launched at Volgograd and Samara in 2015.

According to Russian legislation, the airports can be operated by private companies but the airfields belong to the government, which invests in their renovations. Private companies can invest in the terminal infrastructure.

Sokolov said more than >50 Russian airports increased their traffic more than >20%, while the Russian airline market was up +10.2%.

April 2015: News Item A-1: Russian airlines carried 16.9 million passengers in the first quarter, down -2.3% year-over-year, according to Russia’s Federal Air Transport Agency, Rosaviatsia.

International traffic was down -15.6%, while domestic traffic grew +11.4% year-over-year. The decrease in international traffic is due to the change of currency exchange rates. In January - February, international traffic was down -14.5%.

In January - March, Aeroflot (ARO) carried 5.5 million passengers, up +9.8% year-over-year. Saint Petersburg-based Rossiya (SDM), an Aeroflot Group member, carried 1.035 million passengers, up +21.9% from the year-ago quarter.

Transaero (TRX) carried 2.2 million passengers, down -6% (YOY). (S7) Airlines (SBR)’s passengers carried are also down -6% to 1.56 million. Globus Airline (GLP), a 2nd member of the (S7) Group, carried 481,251 passengers, up +24% year-over-year. Despite the number of passenger decrease of 3 out of 5 of Russia’s biggest carriers, the total market share of the top 5 airlines has increased from 66.1% to 66.9%, which is due to the closure of several small airlines.

Over the past several months, Russian authorities have suspended or canceled the air operator’s certificates (AOCs) of 8 carriers.

Financially troubled UTair (TYU) carried 1.03 million passengers for the 3-month period, down -36.1% year-over-year. To stabilize its financial situation, (TYU) has cut its fleet and network.

Traffic for Russia’s charter carriers is also down for the three-month period. Nordwind (NWD) carried 311,016 passengers, down -59.6% year-over-year. IFly traffic was down -58.5% to 72,865. However, Royal Flight cargo charter airline increased its traffic four times year-over-year to 87,196.

News Item A-2: Russia’s Voronezh International Airport has reported a +5.6% year-over-year growth in passenger numbers for the 1st quarter ended March 31. Traffic increased despite the closure of Polet Airlines (PLT) at the end of 2014; the region’s main carrier lost its (AOC) in April.

In November 2014, (S7) Airlines (SBR) launched Moscow - Voronezh Airbus A320 daily service, which was turned into 2x-daily last December. (SBR) became the 1st serving the destination with A320 family airplanes. The airport was certified to accept modern Western-built narrow bodies, only after the reconstruction of 2013. Aeroflot (ARO) plans to start 2x-daily, Moscow - Voronezh Sukhoi Superjet SSJ100 service in June.

The airport handled 68,555 passengers in January through March, Voronezh said. Airport representatives said international and domestic traffic is growing, although the number of international passengers in Russia decreased in the first few months of the year.

May 2015: Moscow Domodedovo Airport has extended its border control zone by opening a new 6,000-square meter, 22-meter high atrium, which allows the airport to handle arriving and departing passengers at different levels.

The new atrium will also enable the airport to add +24 more passport control channels, from 56 to 80. “The finishing of the next stage of Domodedovo terminal expansion will allow us to optimize the international flights passenger traffic allocation. The Federal Agency for the Development of the State Border Facilities, "Rosgranitsa," together with the airport, plans to continue to implement necessary measures and to finish the checkpoint re-equipment at Domodedovo airport,” the Head of Rosgranitsa Konstantin Busygin said.

According to Rosgranitsa, the authority (in partnership with private investors) is working on the arrangement and development of border checkpoints at 11 airports in Russia.

Last September, Domodedovo concluded a contract to build the 2nd segment of its passenger terminal, which will nearly double terminal space by December 2016. The airport will continue expansion even though its traffic has decreased due to the economic downturn and the move of its biggest partner (Transaero Airlines (TRX)) to Vnukovo Airport.

June 2015: "(S7) Airlines (SBR) Receives Moscow - Salzburg designation," by (ATW) Polina Montag Girmes, June 3, 2015.

Russian authorities have designated Sibir Airline, working under (S7) Airlines (SBR) brand, for scheduled services from Moscow to Salzburg. The same document canceled Aeroflot (ARO)’s designation for the route.

An (S7) (SBR) spokesperson said (SBR) is planning to begin flights in the winter season. (SBR) wants to launch the Salzburg route despite the significant downturn in the international passenger numbers. “Salzburg is a popular destinations among the skiers in winter; it will complement (S7) Airlines (SBR) network to the European ski resorts, which includes Innsbruck, Munich, Verona, and Chambery,” an (S7) spokesperson said.

From January to May, (S7) Airlines’ passengers carried were down -5.7% to 2.14 million, while Globus Airline (GLP)’s grew +17.6% to 637,512 passengers.

International traffic in Russia has decreased over the last several months due to the change of currency exchange rates. In March, Russian carriers cut international networks.

Aeroflot (ARO) launched Ilyushin 96 Moscow - Salzburg scheduled services in 2009. (ARO) grounded the airplane type last year. Russian authorities can withdraw a carrier’s route designation if the airline does not operate service for >2 (IATA) seasons.

July 2015: "(S7) Airlines Reaches 77 Destinations from Domodedovo This Summer; Five New Routes Started Since May" by Airline Analysis, July 20, 2015.

(S7) Airlines (SBR) is Moscow Domodedovo’s biggest airline and Moscow Domodedovo is the Oneworld (ONW) Alliance’s most important airport in terms of weekly seats (being >6x larger than its #2 operation at Novosibirsk. This summer, it will serve 77 destinations non-stop from Russia’s 2nd biggest airport (based on 2015 figures so far), 40 of which are domestic services. (SBR) has been the airport’s biggest airline for some time, accounting for 36% of weekly flights, 34% of weekly seats and 29% of (ASK)s in 2015. Based on the same metrics, #2 carrier at Domodedovo Transaero Airlines (TRX), commands 14% of weekly flights, 18% of weekly seats, and 22% of (ASK)s. Ural Airlines (URL) is the only other carrier at the airport with >10% of weekly departing seats, having a 13% share of capacity.

Apart from a growth blip in 2009, when progress in both weekly departures and destinations served were temporarily put on hold, (SBR) has maintained steady growth over the last 10 years, adding around 3 destinations per year. Since the start of 2015, (S7) (SBR) has added the following new routes from Domodedovo: weekly services to Naples on May 2; 2x-weekly services to Nadym on May 22; daily services to Nizhnekamsk on May 29; 2x-weekly services to Salekhard on June 3; and weekly services to Semipalatinsk on June 20. Between 2006 and 2014 (SBR) more than doubled its weekly flights from Domodedovo. Since last July nearly another 50 weekly flights have been added to its schedule, representing 6% annual growth.

The average weekly frequency for (SBR)’s routes at Domodedovo has been rising steadily since 2006, increasing from 7.66x-weekly to 10.99 in 2015. However, it was in 2014 when this figure peaked, when 11.08x-weekly were operated across (SBR)’s 72-destination network at the airport. In terms of potential network development, (SBR) will add 2x-weekly operations to Salzburg in Austria on December 26, the only new route announced so far for the remainder of 2015 or 2016 from its Moscow hub.

6 destinations are flown from the airport with at least 4 daily flights, led by St Petersburg, which currently offers just <8 daily sectors (54 weekly flights) in July 2015. However, it is the 4,222 km domestic sector to Irkutsk, 1 of the largest cities in Siberia, which is (S7) (SBR)’s most significant route in terms of (ASK)s. 9 of the top 12 routes are flown with >daily service, with only Yakutsk, Ulan-Ude, and Chita all flown on just a daily basis. Despite nearly half of (SBR)’s Domodedovo routes being international, only 3 of the top 12 routes by (ASK)s are outside of Russia (highlighted in light green).

August 2015: News Item A-1: Russian airlines carried >125,000 passengers on Kaliningrad - Moscow and Kaliningrad - Saint Petersburg routes within the framework of Kaliningrad subsidy program for the 1st 4 months. According to Russia’s Federal Air Transport Agency, Rosaviatsia, since April 15, 2015, RUB269 million/$4.09 million was spent for subsidies, 64% of its budget of RUB420 million.

The program started will continue through October 15, 2015. 6 airlines take part in the subsidy program: Aeroflot (ARO), Transaero (TRX), Ural Airlines (URL), UTair (TYU), (S7) Airlines (SBR), and Red Wings Airlines (RWZ).

It is expected that 190,000 passengers will be carried within its framework, down 14% from the year-ago period; 150,000 will be carried on Kaliningrad - Moscow, and 40,000 on Kaliningrad - Saint Petersburg.

Russian authorities launched the Kaliningrad subsidy program in 2011. Kaliningrad is a Russian exclave situated west of the country and does not border the main territory. It is surrounded by Poland and Lithuania.

News Item A-2: Russian airlines have carried 306,000 passengers since spring on routes between the Russian Far East and other parts of the country under a government subsidy program, according to Russian figures just released.

The current subsidy program runs from April 1 through October 31 and applies to destinations in the extreme eastern parts of Russia, between Eastern Siberia and the Pacific Ocean. Eleven Russian airlines (Aeroflot (ARO), Transaero (TRX), Yakutia (SYL), Alrosa, UTair (TYA), VIM Avia (MOV), Ural Airlines (URL), OrenAir (ORB), S7 Airlines (SBR), Ikar, and NordStar (JSC)) are part of the program, and are flying a total of 44 routes between 29 cities in eight federal regions of the country.

According to figures released August 24 by Russia’s Federal Air Transport Agency, Rosaviatsia, Russia has so far this year spent RUB2.072 billion/$30.4 million on subsidizing these operations (61% of the program’s RUB 3.372 billion budget).

Russian authorities first began a Far East subsidy program in 2009.

October 2015: News Item A-1: S7 Airlines (SBR) will carry passengers with Transaero (TRX) tickets, it said. (TRX) had to stop ticket sales from October 1 after a deal with Aeroflot (ARO) failed.

Russia’s Minister of Transport, Maxim Sokolov said Aeroflot (ARO) is coordinating Transaero (TRX) flight operations. (ARO) plans to carry Transaero (TRX) passengers through December 15, 2015, or provide refund.

Sokolov also said Aeroflot (aro) and its subsidiaries (including Rossiya Airlines (SDM), Donavia (DAU), OrenAir (ORB), as well as other carriers like (S7) Airlines (SBR), UTair (TYU), Ural Airlines (URL), Taimyr (working under NordStar brand)) could take part in transporting Transaero (TRX) ticket-holders.

News Item A-2: "Ukraine Extends Ban to All Russian Airlines on October 25" by (ATW) Polina Montag-Girme, October 15, 2015.

The Ukrainian State Aviation Administration announced a total ban of all Russian airlines from flying into Ukraine as of October 25, in a back-and-forth political move.

On September 28, Ukraine announced it would ban Russian airlines from flying into Ukraine from October 25. The list included nearly 20 Russian airlines, among them were the biggest carriers such as Aeroflot (ARO) and (S7) Airlines (SBR). The only big airline not included on the Ukrainian list was UTair (TYU), which would have been able to increase its flights to Kiev.

On September 29, Rosaviatsia, in turn, said it will ban Ukrainian airlines from flying into Russia on October 25. Ukrainian authorities said the latest measure was because Russia’s Federal Air Transport Agency, Rosaviatsia, “failed to provide a response explaining the reasons for flight limitations for Ukrainian carriers into Russia.”

Belarus’ Minsk-based Belavia (BLV), as well as Latvian Riga-based airBaltic (BAU), will benefit from the situation as they are able to offer transfer flights through their bases between Moscow and Kiev.

News Item A-3: Russian civil servants must choose Russian carriers when traveling on business, according to a decree signed by President Vladimir Putin on September 30. The mandate is one of several recent moves by the government to support the Russian airline industry as passenger numbers stagnate.

The decree amends business travel rules for civil servants that states government officials must choose Russian airlines or carriers of the Eurasian Economic Union for duty journeys, except when only foreign carriers serve a necessary route or if fares are sold out for a particular date. The document was prepared by Ministry of Labor in May.

From January - July 2015, Russian airlines carried 52.5 million passengers, the same number compared to the year-ago period. In July, passenger numbers grew +2.8%, continuing a trend of May and June.

October 2015: News Item A-1: "Aeroflot Receives 56 International Routes from Transaero" by (ATW) Polina Montag-Girmes, October 26, 2015.

Russian authorities have canceled 141 of the defunct Transaero Airlines (TRX)’s international route designations and have transferred 56 of them to Aeroflot (ARO) and subsidiary Rossiya Airlines (SDM). The designations, which took effect October 22, are approved for one year and may be extended.

(TRX) ceased operations on October 26 after its air operator’s certificate (AOC) was canceled by Russia’s Federal Air Transport Agency, Rosaviatsia. (S7) (SBR) Group co-owner Vladislav Filev has purchased 51% of Transaero (TRX)'s shares.

(ARO) received designations for several routes between Russia and Kazakhstan (including on routes from Moscow to Astana, Almaty, Aktau, Atyrau, Kokshetau, and Shymkent).

Due to the strict bilateral agreement between Russia and Kazakhstan, Aeroflot (ARO) has not been able to gain a market share in that region.

(ARO) also received designations for European routes that have been liberalized during the last several years and ones where (TRX) was the 2nd Russian-designated carrier, such as routes including Moscow to Rome, Milan and Paris; Saint Petersburg to Rome and Milan; and Moscow to New York. It has also received other designations for popular routes such as from Moscow to London, Vienna, Tel Aviv, Istanbul, Dubai, and Salzburg.

November 2015: (S7) (SBR) Group co-owner, Vladislav Filev (who bought 51% of Transaero (TRX) shares right before authorities pulled its air operator’s certificate (AOC)) has pulled out of the deal.

The official reason given is that (TRX) owners failed to consolidate 51% of shares that are free and discharged. But (TRX) Co-Founder, Alexander Pleshakov accused Filev of the deal collapse. He insisted Filev knew that part of the shares was pledged, when the agreement was signed October 20.

Pleshakov added that he heard about a meeting of Filev and Aeroflot (ARO) management took place on November 2, after which he was informed about the deal failure. Pleshakov said the agreement with Filev is still effective and Filev’s statement is in violation.

(ARO) had previously planned to acquire (TRX) to save Russia’s 2nd biggest airline, which had a growing debt burden. However, Aeroflot (ARO) later dropped its plans, saying (TRX) shareholders failed to consolidate 75% plus 1 share. According to Russia’s Sberbank President, Herman Gref, (TRX)’s overall debt to creditors had reached RUB250 billion/$4 billion.

December 2015: News Item A-1: "Russia’s International Traffic dropped -28.4% in November" by (ATW) Polina Montag-Girmes.

International traffic for Russian airlines was down -28.4% in November year-over-year (YOY) to 2.2 million passengers, according to Russia’s Federal Air Transport Agency, Rosaviatsia.

The total number of passengers carried in November reached 5.7 million, down -11.8% (YOY). The sharp drop is attributed to the closure of Egyptian destinations, following the Metrojet (KLV) Airbus A321 crash on October 31, and charters to Turkey due to increased tensions between the 2 countries after the downing of a Russian fighter jet over Syria by Turkey.

In the January - November period, all Russian airlines carried 86.5 million passengers, down -0.4% (YOY). International traffic was down -14.9% to 37.6 million, while domestic routes grew +14.5% to 48.9 million.

Aeroflot (ARO) carried 24 million passengers in the 11-month period, up +10.7%. (S7) (SBR) carried 7.6 million, up +2.6 %. While Globus (GLP), a part of the (S7) Group, carried 2.2 million, up +15.2%. UTair (TYU), that announced its debt portfolio refinancing, carried 5.2 million, down -35.7%. Ural airlines (URL) carried 5.1 million, up +6.3%. (URL) remained 5th place in the ratings, while Rossiya Airline (SDM) stayed at the 6th place with 4.5 million passengers carried, down -6.7% (YOY).

January 2016: "(S7) Airlines (SBR) Passenger Traffic up +5.6% in 2015" by (ATW) Polina Montag-Girmes, January 20, 2016.

(S7) Airlines (SBR) carried 10.6 million passengers in 2015, up +5.6% year-over-year (YOY). The (S7) Group publishes combined statistics for Sibir Airline and Globus (GLP).

It operated 88,695 flights, up +3%. Domestic traffic grew +11.7% (YOY) to 7.6 million. In 2015, the group added routes to Salekhard, Mirny, and Blagoveschensk.

International traffic showed a downward trend in 2015, although exact numbers were not reported. Despite the negative international destinations trends, (S7) Group members will launch several new international routes in 2016, such as Berlin, Dusseldorf, Malaga, and Ibiza.

“During the year, we also intend to launch frequencies at 45 existing domestic and international routes,” (S7) Group Strategy Director, Igor Veretennikov said.

In October 2015, (S7) Group co-owner, Vladislav Filev bought 51% of Transaero Airline (TRX) shares in an effort to avoid (TRX) bankruptcy, but Filev ultimately stopped the deal, although (S7) member airlines carried (TRX) passengers after (TRX) ceased operations.

March 2016: News Item A-1: "Emirates, Russia’s S7 Airlines to Code Share" by (ATW) Polina Montag-Girmes, March 7, 2016.

Emirates Airline (EAD) will code share with (S7) Airlines (SBR) as (EAD) aims to increase its Russian network.

Under the code share agreement, (EAD) will add its code to >30 (SBR)’s domestic routes and 1 international destination, Novosibirsk - Dubai. (EAD) add the S7 code to its Dubai - Moscow service.

(EAD) began its cooperation with (S7) Airlines (SBR) in 2003 with an interline agreement (which was expanded in 2008) to launch Dubai - Moscow service.

On December 21, 2015, (SBR) also announced a code share agreement extension with United Arab Emirates (UAB) flag carrier Etihad Airways (EHD). From January 16, 2016, (EHD)’s Abu Dhabi - Singapore service was added to the agreement, as well as (SBR)’s domestic routes from Moscow to Novosibirsk, Chelyabinsk, Krasnoyarsk, Novy Urengoy, Omsk, Perm, Rostov-on-Don, and Sochi.

(S7) Airlines (SBR), which is the second largest carrier in Russia, includes the Sibir and Globus (GLP) brand. The airlines carried 10.6 million passengers in 2015, up +5.6% year-over-year (YOY). (SBR)’s traffic was up +22.7% (YOY) in January 2016.

News Item A-2: "Russia to Spend $44.4 million for Far East Subsidy Program in 2016" by (ATW) Polina Montag-Girmes, March 8, 2016.

Russian authorities have set a budget of RUB3.25 billion/$44.4 million for 9 carriers to take part in a government-subsidized program on flights between Russia’s Far East and other parts of the country.

The 9 Russian carriers taking part in the program are Aeroflot (ARO), Alrosa, Yakutia (SYL), Ikar, NordStar (JSC), (S7) Airlines (SBR), Ural Airlines (URL), (VIM) Avia (MOV), and UTair (TYU).

According to a government statement, the 2016 subsidy program comprises 71 destinations, which include 13 cities in the Far East region. This year’s program will again run from April 1 through October 31. The participating airlines are expected to carry around 480,000 passengers during that time frame.

In 2015, the program spent RUB3.37 billion for 11 airlines to carry 479,000 passengers. Aeroflot Group member OrenAir (ORB) did not apply for participation this year, while Transaero (TRX) ceased operations in 2015.

Russian authorities launched the Far East subsidy program in 2009.

News Item A-3: "(S7) Airlines Reports Domestic Traffic up +25.2% in February" by (ATW) Polina Montag-Girmes, March 21, 2016.

(S7) Airlines (SBR) increased domestic traffic +25.2% in February. Sibir (SBR) and Globus Airlines (GLP), which are working under "(S7)" brand, carried 766,935 passengers last month, up +19.8% year-over-year (YOY).

Domestic traffic reached 582,239 passengers, while on the international routes were carried 184,696 passengers, up +5.3% (YOY). The airlines performed 6,398 flights in February. (SBR) said the growth was because of increased frequencies on existing routes as well as a new rates system.

(S7) Airlines (SBR) is now the 2nd-largest carrier in Russia. It carried 10.6 million passengers in 2015, up +5.6% (YOY). Traffic was up +22.7% (YOY) in January 2016.

In February, Russian airlines carried 5.1 million passengers, up +0.2% (YOY), slowly reversing a downward trend.

News Item A-4: (S7) Group (SBR) co-owner Vladislav Filev will launch a new airline called "Charlie Airlines" from Cyprus.

News Item A-5: SR Technics (SWS) has signed a long-term agreement with Russia’s (S7) (SBR) Engineering to provide aircraft operators with maintenance and on-wing services for (CFM56-5B)s and (CFM56-7B)s. (SWS), the Swiss Maintenance Repair & Overhaul (MRO) organization will carry out services at (S7) (SBR)’s new repair facility at Domodedovo Airport in Moscow, due to start operations in summer 2016, along with centers in Novosibirsk and Mineralnye Vody.

April 2016: "S7 Airlines is to be 1st A320neo Family Operator in Russia" by (ATW) Polina Montag-Girmes, April 6, 2016.

(S7) (SBR) Airlines has agreed to lease 3 A321neos from Air Lease Corporation (ALE) and has signed a letter of intent (LOI) for 2 A320neos, making (S7) the 1st A320neo family operator in Russia.

The 1st aircraft is scheduled to be delivered in spring 2017. S7’s A321neo will seat 203 passengers in 2-class configuration, while the A320neo will seat 164 passengers in 2 classes.

(SBR) (CEO), Vladimir Obyedkov said the “A320 family is a core of the (S7) Airlines (SBR) fleet. The A320neo offers more advantages [such as a decrease in fuel consumption and increase in flying range].” He also said that “from the passenger’s standpoint it provides a comfortable cabin and the lowest noise level in that aircraft range. We plan to replace all A320 family aircraft with the A320neo,” he said.

(S7) includes Sibir (SBR) and Globus airlines (GLP), which carried 10.6 million passengers in 2015, up +5.6% year-over-year. On March 31, (S7) announced a Boeing 737 fleet increase. With +6 additional 737-800s, the group’s fleet comprises 64 aircraft, including 19 737-800s, 2 767s and 43 A320 family aircraft.

June 2016: News Item A-1: Russia OKs Moscow Sheremetyevo development.

The Moscow Region Urban Council has approved the Northern Terminal Complex development project for Moscow Sheremetyevo International Airport (SVO), which is scheduled to be completed by 2018.

October 2016: News Item A-1: S7 Airlines (SBR) has reported it carried 967,075 domestic passengers in September, up +30% year-over-year (YOY). Sibir (SBR) and Globus (GLP) Airlines, which fly under the "S7" brand, carried 1.3 million passengers in September, up +27% (YOY).

In September, (S7) Airlines (SBR) reportedly carried 379,664 international passengers, up +21.2%. Since the beginning of the year, (S7), which is based at Moscow Domodedovo and Novosibirsk Tolmachevo airports, has carried >10 million passengers.

(S7) Group Commercial Director Igor Veretennikov said that in September the number of international passengers grew despite the end of the main holiday season. He added the total number of passengers in 1st 9 months increased nearly one-third compared to the year-ago period.

(S7) is the 2nd biggest carrier in Russia after Aeroflot (ARO).

News Item A-2: Moscow Domodedovo International Airport has reported a 2016 1st-half net income of +RUB3.7 billion/+$57.1 million, up +4% year-over-year (YOY). The 1st-half reporting period ended June 30.

The airport also disclosed never-before-published financial results for 2014 and 2015. In 2015, net income was RUB8.15 billion, down -28.5% from RUB11.4 billion in 2014.

1st-half 2016 revenue was RUB17.8 billion, down -4.3% (YOY). Passenger traffic for the (1H) was down -8.3% (YOY) to 12.6 million. Of that figure, domestic traffic was 7.5 million, up +2.5% (YOY), while international traffic was 5.1 million, down -20.6% (YOY).

The airport said the decreased results were because of the Egypt and Turkey charter flights ban, economic turbulence and airline closures, which included the bankruptcy of Transaero Airlines (TRX) at the end of 2015 and the grounding of Metrojet-branded Kogalymavia Airlines from March 15, 2016 because of debt violations.

Despite the traffic and revenue downturn in 2015 and (1H) 2016, Domodedovo Director for External Relations Denis Nuzhdin said the airport sees conditions for traffic growth as it continues to increase capacity.

In September, airport owner and Chairman Dmitry Kamenshchik clarified Domodedovo’s development plans after authorities dropped all criminal charges against him. Kamenshchik was accused of establishing inappropriate security measures at the airport that led to the terrorist attack that occurred on January 24, 2011, when 37 people were killed and 172 were injured. He was detained in February 2016.

November 2016: News Item A-1: (S7) Airlines (SBR) has signed a code share agreement with Singapore Airlines (SIA). (SIA), the Singaporean carrier’s SQ code will be added to (S7) flights from Moscow to 19 cities in Russia, including Saint Petersburg, Kaliningrad, Kazan, Samara, and Novosibirsk.

(SIA) performs 4x-weekly 777-300 Singapore - Moscow Domodedovo service. Moscow Domodedovo is 1 of (S7)’s Russian bases, along with Novosibirsk Tolmachevo airport.

Earlier this year, (S7) announced a code share with Emirates (EAD). Under this code share agreement, (EAD) added its code to >30 of (S7)’s domestic routes and Novosibirsk - Dubai international service. (S7) reported a +30% year-on-year domestic traffic increase in September.

News Item A-2: Russian aviation authorities have offered the 6 airlines participating in the Kaliningrad subsidy program a chance to further develop the Kaliningrad network and sell more subsidized tickets via their websites, using fewer agencies.

In 2016, 6 carriers: Aeroflot (ARO), Sibir (which operates under the (S7) Airlines (SBR) brand), UTair (TYU), Ural Airlines (URL), Red Wings (RWZ) and Nordavia (AEN)) operated routes from Kaliningrad to Moscow and Saint Petersburg within the program framework. Russia launched the Kaliningrad subsidy program in 2011, which runs from May 15 through October 15 each year.

According to Russia’s Federal Air Transport Agency, Rosaviatsia, in 2015, airlines carried 170,000 passengers, down -17% from 205,000 in 2014.

Kaliningrad is a Russian exclave situated west of the country and does not border the main territory. It is surrounded by Poland and Lithuania.

January 2017: News Item A-1: (S7) Airlines (SBR) will start Embraer E170LR operations from April 1 with services from Novosibirsk to Surgut, Gorno-Altaisk, Nizhnevartovsk, Noyabrsk, and Novy Urengoy.

In December 2016, (SBR) agreed to lease 17 used Embraer E170s from (GE) Capital Aviation Services (GEF). The 1st aircraft will be delivered in the spring.

Before the end of the year, (SBR) will receive all ordered E170LRs. The 76Y-seat E170 will be based at Novosibirsk Tolmachevo airport, which is one of (SBR)’s main bases along with Moscow Domodedovo.

(S7) Group Commercial & Strategy Director Igor Veretennikov said Novosibirsk can easily “connect the regions in most efficient way so passengers will spend less time traveling from Ural and West Siberia to Russia’s Far East and Central Asia.” He said currently many travelers must fly via Moscow airports.

(S7) Airlines (SBR) will be the 1st E170 operator in the country.

News Item A-2: (S7) Airlines (SBR) Engineering in November 2016 performed a complete paint over of an Airbus A321 operated by Kazakhstan's national carrier Air Astana (AKZ).

March 2017: News Item A-1: (S7) Airlines (SBR) started a new service between Moscow/Domodedovo and Vienna, 5x-weekly (A319) and will be upgraded to daily in May.

News Item A-2: Russian airlines carried 12.7 million passengers in January - February, up +19.3% year-over-year (YOY). International traffic grew +30% (YOY) to 4.9 million; domestic traffic was up 13.7% to 7.9 million. Cargo and post traffic grew +21.4% (YOY) to 150,500 tonnes.

Sibir Airlines (SBR), which works under the (S7) airlines brand, carried 1.3 million passengers, up +1% (YOY). Globus (GLP), which also works under the (S7) Airlines brand, carried 618,261 passengers, up +71% (YOY).

May 2017: News Item A-1: Russia’s airlines have sold >310,000 out of 447,000 subsidized tickets in the Far East subsidy program, with a value of RUB2.15 billion/$37.6 million).

From April 1 to May 1, 10 airlines carried 44,200 passengers within the program. The most in-demand destinations were routes connecting Moscow with Vladivostok, Petropavlovsk-Kamchatsky, Yuzhno-Sakhalinsk, Khabarovsk, Yakutsk and Magadan, according to a May 15 statement by Russia’s Federal Air Transport Agency, Rosaviatsia.

The government has set a budget of RUB2.9 billion for 10 carriers, comprising Aeroflot Airline (ARO), Alrosa, Ikar, (S7) Airlines (SBR), (VIM) Airlines (MOV), NordStar (JSC), Nordwind (NWD), Ural Airlines (URL), UTair Aviation (TYU) and Yakutia (SYL).

The 2017 subsidy program comprises 50 destinations that connect the Far East and other parts of the country, plus 9 destinations in Far East inland. It runs from April 1 - October 31, 2017.

News Item A-2: (S7) Airlines will start 2x-weekly Moscow Domodedovo-Tehran Airbus A319 service on June 22.

In February 2016, Russia and Iran established a bilateral agreement designating an unlimited number of carriers on specified routes. According to the agreement, the airlines can operate a maximum of 28 frequencies per week with any aircraft type.

Iran’s Mahan Air launched weekly Tehran-Moscow Vnukovo Airbus A310 service in January 2016. According to the carrier, it also operates seasonal flights from Tehran to Sochi and St Petersburg. Russia’s Aeroflot (ARO) and Iran Air also operate Moscow Sheremetyevo-Tehran services.

News Item A-3: The (S7) Airlines Group, which includes Sibir (SBR) and Globus (GLP) carriers, is based at Moscow Domodedovo and Novosibirsk airports, but has also expanded to other country airports.

From January to April 2017, Sibir (SBR) carried 2.7 million passengers, up +1.2% year-over-year (YOY), Globus (GLB) carried 1.3 million passengers, up +67.7% (YOY). The group has a well-developed domestic network, but has also increased the number of international destinations.

At the end of April this year, (S7) started 3x-weekly Moscow - Urumqi A320 service; on May 9, (S7) started its 1st international service from St Petersburg, launching 3x-weekly A319 flights to Berlin Tegel.

June 2017: News Item A-1: Russian airlines carried +46.9% more international passengers year-over-year (YOY) in May, reaching 3.7 million passengers for the month.

Domestic traffic increased +14.6% (YOY) to 5 million passengers in May. For the January - May period, Russian airlines carried 35.8 million passengers, up +22.1% (YOY). International traffic increased +36% (YOY) to 14 million passengers, while domestic traffic grew +14.6% to 21.8 million passengers. Load factor increased 3 percentage points from 76.6% in the 1st 5 months of 2016 to 79.6% for January - May 2017.

Individual airlines reported the following January - May passenger figures:

* Aeroflot Airline (ARO) carried 12.3 million, up +13.1% (YOY).

* St Petersburg-based Aeroflot subsidiary, Rossiya Airlines (SDM) carried 3.69 million, up +78%.

* Sibir Airlines (SBR), also known as (S7), carried 3.5 million, up +3.3% YOY. Globus (GLP), which operates under the (S7) Airlines brand, carried 1.7 million, up +51.8% (YOY).

* UTair Aviation (TYU) carried 2.6 million, up +22.4%.

* Ural Airlines (URL) carried 2.5 million, up +29%.

News Item A-2: (S7) Airlines (SBR) expects to take delivery of its 1st Airbus A320neo is the coming weeks, making (S7) the 1st A320neo family operator in Russia, (CEO) Anton Eremin said recently on the sidelines of the (IATA) (AGM) in Cancun.

Eremin said (S7) plans to operate only narrow body and regional aircraft in the future and will phase out its last remaining wide body airplanes, 2 Boeing 767-300ERs. “In the future, the A321 will be the largest aircraft in our fleet,” he said.

(S7) Airlines (SBR) has agreed to lease 3 A321neos from Air Lease Corporation (ALE) and has signed a letter of intent (LOI) to acquire 2 A320neos.

(SBR) also has 9 Boeing 737 MAX on order. “Our 1st 737 MAX is expected for delivery in September 2018,” Eremin said.

Asked if it makes sense economically to operate both types (the A320neo and 737 MAX) Eremin noted that historically (SBR) has always had relationships with both Boeing and Airbus. “Also the aircraft are different in terms of range,” he said. “It gives us some benefit” to have ties to both Airbus and Boeing.

(SBR) is in the process of phasing in 17 Embraer E170LRs, which will be all delivered by the end of the year, Eremin said. The E170s are leased from (GE) Capital Aviation Services (GECAS). (SBR) is the 1st E170 operator in Russia.

(SBR) is the 2nd largest airline in Russia behind Aeroflot (ARO). “75% of our business is domestic,” Eremin said. “However, our international business is expanding. After the bankruptcy of Transaero (TRX), a bloody price war has ended. I believe there will be fewer airlines in the future in Russia. There are still too many small carriers.”

2 E170-100SU (012, VQ-BYA; 015, VQ-BYB), ex-(N801MA, N803MD), (GECAS) (GEF) leased.

July 2017: E170-100SU (016, VQ-BYC), ex-(N804MD), (GECAS) (GEF) leased.

August 2017: Russia’s (S7) Engineering (SBR), a Maintenance Repair & Overhaul (MRO) member of the (S7) (SBR) Group, will provide maintenance for Azimuth Airline (AZM)’s Sukhoi Superjet 100 (SSJ100) fleet, (SBR) said on August 8.

(AZM), The Rostov on Don-based carrier, which is scheduled to start operations in September, will have a fleet of 12 SSJ100s. Azimuth Airline (AZM) took delivery of its 1st SSJ100 July 7. The aircraft is leased by the State Transport Leasing Company (STLC).

(S7) Engineering (SBR) launched a dedicated SSJ100 line station at Rostov on Don in July.

In 2016, (S7) Engineering (SBR) won approval by Russia’s Federal Air Transport Agency (FAP-285) for all types of SSJ100 line and base maintenance services, as well as component repairs.

Until recently, the company provided SSJ100 maintenance only at its facilities at Moscow Domodedovo and Mineralnye Vody airports. (S7) Engineering (SBR) has performed 24 periodic maintenance checks on SSJ100s for operators including IrAero, Gazprom Avia (GZP) and Yamal (LLM).

(SBR), the (MRO) provider has created a pool of spare parts and components to operate maintenance checks independently of the Original Equipment Manufacturer (OEM), up to "C" checks. It also has contracts in place with the line up of SSJ100 component suppliers.

September 2017: News Item A-1: (S7) Airlines (SBR) has ordered a full-flight simulator (FFS) for the Embraer E170 from FlightSafety International. Delivery and installation at (SBR) Training are scheduled for the end of 2018.

The new simulator will be equipped with high-tech visualization and motion control systems, as well as a multi-functional operating station with a user-friendly interface for instructors, according to (SBR).

(S7) Airlines (SBR) General Director Vladimir Obiedkov said, “We are adding more of Embraer E170 aircraft to the (S7) Airlines air fleet and we plan to have 17 of them in total.” He said the (FFS) “will allow our pilots to undergo training and retraining in Russia on the basis of (S7) Training, the largest training center in Eastern Europe, under the guidance of experienced instructors. The modern visualization system allows you to maximize the realism of a training flight and a convenient instructor station makes it possible to recreate any conditions and work out all the necessary skills.”

(S7) Airlines (SBR) took delivery of its 1st E170 in April 2017 and has 6 of the type operating on flights from Moscow, Saint Petersburg and Novosibirsk.

(S7) Training, which was established in 2004 and based near Moscow Domodedovo Airport, operates (FFS)s for the Airbus A320-200, Antonov An-148-100 and Boeing 737-800.

News Item A-2: AerCap (DEA) delivered a 2nd Airbus A320neo to Russia’s (S7) Airlines (SBR) on September 21. (SBR)’s 1st A320neo, which was delivered in July.

(SBR) carried >30,000 passengers on >200 flights from Moscow Domodedovo to Novosibirsk, Irkutsk, Munich, Pula and Palma de Mallorca.

October 2017: News Item A-1: "More Russian Carriers Take Over (VIM) Airlines’ Far East Routes" by (ATW) Polina Montag-Girmes montag.girmes@gmail.com October 20, 2017.

Russia’s Ikar Airline, which operates under "Pegas Fly" brand, will take over (VIM) Airlines (MOV)’s service to Anadyr in Russia’s Far East as (VIM) ceases scheduled services following financial turbulence, the Chukotka region government said in a statement on October 20. Deputy Governor Leonid Nikolaev said Krasnoyarsk-based Ikar confirmed it will launch Moscow Sheremetyevo to Anadyr Boeing 767 services from March 2018; ticket sales will start in November.

Currently, UTair Aviation (TYU) is the only carrier to provide service on the route. (TYU) will carry passengers with tickets for (VIM) Airlines flights through October 28 if free seats are available.

In addition, the Russian government issued a statement saying an agreement had been reached with Far East Yakutia Airlines (SYL) to increase frequencies on Anadyr to Magadan and Pevek to Moscow services from weekly to 2x-weekly.

Also, the Chukotka government is negotiating with Aeroflot (ARO) subsidiary Aurora Airline (AAZ) and (S7) Airlines (SBR) to develop the route network to neighboring regions, including Anadyr to Petropavlovsk to Kamchatsky and Anadyr to Yakutsk to Novosibirsk services.

Chukotka is in a remote region of Russia, wedged between the Pacific and the Arctic oceans; half of its territory is beyond the Arctic Circle. Because of the region’s location, the government considers transport development to be very important.

News Item A-2: Russian airlines carried 81 million passengers in the 1st 9 months of 2017, up +19.7% year-over-year (YOY).

International traffic grew +36.5% to 33 million; domestic traffic was up +10.4% to 48 million. Load factor increased 1.9 points (YOY) to 84% (LF). Cargo and post traffic grew +19.5% to 819,105 tonnes.

Individual airlines report the following 9-month figures:

* Aeroflot Airline (ARO) carried 24.8 million, up +14.2% (YOY).

* St Petersburg-based Aeroflot (ARO) subsidiary Rossiya Airlines (SDM) carried 9 million, up +47.9%.

* Sibir Airlines (SBR) carried 7.6 million, up 1.9%. Globus (GLP), which also works under the (S7) Airlines (SBR) brand, carried 3.4 million, up +23.8%.

* Ural Airlines (URL) carried 6.1 million, up +22.9%.

* UTAir Aviation (TYU) carried 5.5 million, up 9.8%.

The total market share of Russia’s 5 biggest airlines declined to 65.5% from 66.9% in January to September 2017.

December 2017: Russian airlines carried 89.9 million passengers in January to October 2017, up +19.3% year-over-year (YOY).

International traffic grew +34.8% to 36.8 million; domestic traffic was up +10.5% to 53.1 million. Load factor increased +1.9 points (YOY) to 83.8% LF. Cargo and post traffic grew +18.3% (YOY) to 921,059 tonnes.

Individual airlines report the following (1H) traffic figures:

* Aeroflot Airlines (ARO) carried 27.7 million, up +13.9% (YOY).

* St Petersburg-based (ARO) subsidiary Rossiya Airlines (SDM) carried 9.9 million, up +44.4%..

* (S7) Airlines (SBR) carried 8.5 million, up 2.6%. Globus (GLP), which also works under (S7) Airlines brand, carried 3.7 million, up +21.7%.

* Ural Airlines (URL) carried 6.9 million, up +24% (YOY).

* Utair Aviation (TYU) carried 6.1 million, up +9%.

The total market share of Russia’s 5 biggest airlines declined to 65.7% from 67.1% in the 10-month period.

Fleet:
(definitions)

Click below for photos:
SBR-737-522
SBR-767-300ER - 2012-06
SBR-A310 - 2011-11
SBR-A310-200
SBR-A310-204
SBR-A319
SBR-A319-2011-06
SBR-A320 - 2016-03.jpg
SBR-A320-214-MAR08
SBR-A320neo - 2016-04.jpg
SBR-IL-86-AUG08
SBR-TU-154M RA-85618

December 2017:

2 737-400 (CFM56-3).

0 737-522 (CFM56-3C1) (2343-26672, /92 VP-BSQ; 2345-26675, /92 VP-BSU; 2421-26692, VP-BSV; 2423-26695, /93 VP-BSW; 2485-26699, /99 VP-BSX), EX-(UAL), (GEF) LSD 2005-05. 26672; 26692; RTND 2007-12. 26675; RTND; LST (MCC) 2008-04. 25283; 25387; 26672; 26675; 26692; 26695; 26699; TO AERO (NIG) 2008-09. 8F, 96Y.

5 737-522 (CFM56-3C1) (1948-25001, /90 VP-BTD, 2005-10; 1987-25008, /91 VP-BTE, 2005-10; 1999-25009, /91 VP-BTF, 2005-11; 2146-25383, /91 VP-BTG; 2179-25387, /91 VP-BTI, 2005-10), EX-(UAL). AIRCASTLE LSD. 8F, 108Y.

0 737-528 (CFM56-3) (2099-25206, VP-BRU; 2108-25227, BP-BRV), (GEF) LSD, WET-LST (VID) 2006-12. RTND. 8F, 108Y.

10 + 10 OPTIONS 737-800 (CFM56-7B), 160Y.

3 737-800 (CFM56-7B), 160Y.

1 737-8GJ (CFM56-7B) (41399, VQ-BVL), EX-(VT-SZL), (BOC) AVIATION (SIL) LSD. 160Y.

4 737-800 (CFM56-7B), (ILF) 6 YR LSD. 160Y.

9 ORDERS 737 MAX:

O 757-200, RTND (ABL), MAINT BY (HAP).

2 767-306ER (CF6-80C2B6F) (738-28884, /99), EX-(LOT), (AWW) LSD 2008-07 & 2008-11. TO BE PHASED OUT SOON. 36C, 188Y.

00/00 ORDERS (2016-?) 787-8 DREAMLINER, 15/10 ORDERS CANCELLED:

0 A310-204 (CF6-80C2A2) (427, /87, VP-BTK, 2004-12; 468, VP-BSZ, 2005-06; 487, /89, 2006-04), EX-(HAP), DEFAG LSD. RTND. 271Y.

0 A310-204 (CF6-80C2A2) (430, /87 VP-BSY), EX-(HAP) 2005-05. 271Y.

0 A310-304 (CF6-80C2A2) (520, /89), EX-(HAP) 2005-12. 271Y.

0 A310-304 (PW4152) (442, /87 F-OGYP, 2004-06 W/O 2006-07; 453, /87 F-OGYQ, 2004-05), (AFIS) LSD TIL 2007-12. 12C, 193Y.

0 A310-304 (CF6-80C2A2) (475, /88 VP-BAG), EX-(ARO), (GEF) LSD 2005-01. RTND. 12F, 35C, 138Y.

19 A319-114 (CFM56-5A5) (1071, /99 VP-BTN, 2006-06; 1078, /99 VP-BTV; 1090, /99 VP-BTW; 1091, /99 VP-BTX; 1126, /99 VP-BTN*; 1129, /99 VP-BTO; 1131, /99 VP-BTP; 1149, VP-BTQ; 1164, /00 VP-BTO; & 1167, VP-BTT), EX-(NWA). 1149; 1164; 1167; WET-LST ROSSIYA (SDM) 2007-01. 1819, /02 VP-BHF, 2007-07; 1870, /02 VP-BHG; 2028, /03 VP-BHI; 2369, /04 VP-BHJ, 2007-07; 2373, /04 VP-BHK, 2007-07; 2464, /05 VP-BHL, 2007-08; 2618, /05 VP-BHP, 2007-07; 2641, /05 VP-BHQ, 2007-07; 2474, /05 VP-BHV, 2007-07), MIRAMONTE (PK AIRFINANCE) LSD, BF (NWA) 2007-07. *RE-PAINTED INTO ONEWORLD (ONW) COLORS 2012-09. 16F, 108Y.

24 ORDERS A320:

3 A320-200, (ALE) 8 YR LSD.

1 A320-211 (229), WET-LST (ARZ) 2002-12.

5 A320-214 (3446, VP-BCZ, 2008-03 - SEE ATTACHED PHOTO - - "SBR-A320-214-2008-03;" 3473, /08 VP-BCP; 3490, /08 VP-BCS; 3494, /08 VP-BDT; 3866, VQ-BDE, 2009-04; 3880, VQ-BDF, 2009-05), (ILF) 6 YR LSD. 164Y:

3 A320-214 (4032, VQ-BES, 2009-12; 4150, VQ-BET, 2009-12; 4460). 164Y.

2 A320neo, (DEA) LEASED 2017-06 AND 2017-09. 164 PAX, 2 CLASS.

1 A321-211 (2076, VQ-BQU), 2013-12.

1 +2 ORDERS (2017-07) A321neo, (ALE) LEASED. 203 PAX, 2 CLASS:

4 +13 ORDERS EMBRAER E170LR (012, VQ-BYA; 015, VQ-BYB; 016, VQ-BYC, 037, N816MA), (GE) CAPITAL AVIATION SERVICES (GEF) LSD: 76Y.

0 AN-12, RTND.

0 AN-24B (RA-47185 TO NOVOSIBIRSK 2000-12).

1 AN-26 (AI-24VT) (3506, /75 RA-26563), FREIGHTER/COMBI 20Y.

0 AN-32, RTND.

0 AN-38 (3801001, 3), RTND.

00 IL-86 (NK-86) (51483208071, RA-86103), (ARO) LSD 2000-02; (51483210093 RA-96125, TO (ESL) 2000-09). 51483206052, RA-86081; 51483206060, RA-86089; NEW 2001-08. 51483207070, RA-86102; 51483207068, /88 RA-86097 - - SEE ATTACHED PHOTO - - "SBR-IL-86-2008-08;" 51483208080, RA-86112; WFU 2001-08. 51483208073 WFU 2005-01. 51483209088 ST URAL AIRLINES 2005-03. ALL IL-86'S TO BE WITHDRAWN FROM SERVICE (WFS) BY NOVEMBER 2008. 350Y.

50/10 ORDERS SUKHOI RRJ-95 (SM-146 TURBOFANS):

0 TU-134A-3 (35220, RA-65881), EX-(VOR), 2000-09. RTND.

0 TU-134A-3's (48540, RA-65033; 4352205, RA-65615), 2004-02. RTRD.

0 TU-154B-1 (NK-8-2U) (237, /77 RA-85237), RTRD. 8F, 140Y.

0 TU-154B-2 (NK-8-2U) (81A-471, /81 RA-85471), 2002-10 & 2004-02. RTRD. 8F, 140Y.

0 TU-154B-2 (NK-8-2U) (402, /80 RA-85402; 437, /80 RA-85437; 451, /80 RA-85451; 453, /80 RA-85453; 461, /80 RA-85461; 485, /81 RA-85485; 495, /81 RA-85495; 556, /82 RA-85556 W/O 2004-08; 583, /83 RA-85583), 402; 437; 451; 453; 461; RTRD. LAST 3 GROUNDED 2008-10. 8F, 140Y.

00 TU-154M (D-30KU-154-II) (866 LST (IRN) 1998-09), 705, /86 RA-85610, TO (VNU) 2001-08. 739, /86 RA-85620, 2001-08. 861, /90 RA-85690 RF DAALLO 2001-08. 866, /90 RA-85693 DESTROYED W/O 2001-10. WFU. 761, /87 RA-85632; 834, /90 RA-85674; 10/01. 738, /86 RA-85619 "YULIA FOMINA;" 749, /87 RA-85623; 750, /87 RA-85624; 906, 1/05; 918, /92 RA-85736, EX-(VNU); 926, /92 RA-85729; TO (VNU) 2001-10. 874, /91 RA-85699 TO KUBAN 2002-05. 727, RA-85628; TO (VNU) 2004-06. 97A-1009, RA-85828; 2004-12. ALL 27 GROUNDED 2008-10. 8C, 138Y.

0 TU-204-100, LSD 1999-12. 1 RTND.

2 + 4 ORDERS TU-204-100 (PS-90A) (1450742564017, /96 RA-64017), PERM LSD 2000-05. (1450743164011, /95 RA-64011; 2001-01, EX-(VNU). 184Y.

1 YAK-40 (9730655, RA-87916), 2004-02.

Management:
(definitions)

Click below for photos:
SBR-1-ANTON EREMIN S7 CEO-2014-04
SBR-CEO-2010-12-A
SBR-CEO-2010-12-B
SBR-CEO-2010-12-C
SBR-VADIM BESPERSTOV
SBR-VLADI FILEV-2011-01-A
SBR-VLADI FILEV-2011-01-B
SBR-VLADI FILEV-2011-01-C
SBR-VLADI FILEV-2011-01-D
SBR-VLADI FILEV-2011-01-E

VLADISLAV FILEV, (SBR) CO-OWNER
(T: 7-3832)) 599-011).
Vladislav Filev provided the following airline background information
December 2010: Opposite the monolithic facade of Moscow's Lubyanka, which once housed the (KGB)'s torture prison, is the head office of a Russian carrier whose determination to shake off communist-era legacies extended to painting its aircraft in a most un-Soviet vivid green. And there is not a Tupolev among them. Through the crisp winter air, you can almost hear the Politburo turning in their Kremlin Wall tombs.

(S7) Airlines (SBR) shrugged off its former name, "Sibir" in 2005, severing the brand that tied it to Russia's coldest, most inhospitable region in favor of a more daring identity, based, of all things, on its (IATA) designator code. It is the name under which it has been warmly welcomed as the newest member of the Oneworld (ONW) alliance.

The SkyTeam (STM) alliance might have picked up the venerable Aeroflot (ARO), but the (ONW) alliance believes it has snared the better partner. (SBR) Group Chief, Vladislav Filev unashamedly views (SBR) as transport for the (MTV) generation. "Some like Mick Jagger, others like Britney Spears," said Filev, grinning infectiously at the comparison. "With airlines, it's the same story."

While the post-glasnost Aeroflot (ARO) underwent extensive modernization, the reinstatement of its hammer-and-sickle emblem and the subtle dropping of the word "international" from its branding seemed to lend credibility to Filev's view that the once-omnipresent flag carrier (ARO) is likely to be selected by passengers who feel "historically Russian." "We feel we are more international than (ARO), although we fly less internationally," he said. "We try to be international in soul."

(SBR) brings three hubs to the (ONW) alliance network - Moscow Domodedovo, Novosibirsk, and Irkutsk (and 55 destinations in Russia and the (CIS)). With flights spanning the vast Russian landscape from St Petersburg to Norilsk, Vladivostok and Petropavlovsk-Kamchatsky, it claims to operate the most extensive domestic network, and (SBR)'s route map also reaches to China, South-East Asia, plus eastern and western Europe.

Filev recalled being in the office on April 1st 1998 (the "Day of Laughter" on the Russian calendar). At this time, his airline had just two flights on its schedule, from Novosibirsk to Moscow and Beijing. Today, (SBR) operates 160 daily services. "Twenty-four times bigger in 12 years," said Filev. "I think that's a big result. Today, we earn 1998's entire revenue in less than two weeks." But he admitted this snowballing of (SBR)'s operations has not necessarily been in the airline's interests. "Our vision is that we grew too fast," said Filev. "We need a certain time to make our business better organized, slim, and our procedures more solid. We believe the problem of the airline business globally is concentration on growing of operations instead of improvement of operations."

That problem is particularly pertinent to Russia, which has been wrestling with consolidation since the five-member AirUnion alliance, centered on KrasAir (ZXD), collapsed spectacularly amidst the 2008 fuel crisis. As rival airlines, including (SBR), picked over the remnants of AirUnion's route network, the Russian government drew up plans to create a successor to the alliance that would bring together several carriers (Rossiya (SDM) and Vladivostok Avia (VLK) among them) under the brand "Rosavia."

Rosavia was put forward as a potential rival to Aeroflot (ARO), which, at the time, was testing the mood for a consolidation proposal of its own: the acquisition of a large shareholding in (SBR). But the Russian anti-monopoly commission, fearing that such close ties between two of the country's biggest airlines would inevitably result in higher fares and domination of important routes, effectively neutered (ARO)'s ambition in late 2008. (ARO) would instead expand at the expense of Rosavia, after a government-level decision to bring the component carriers under Aeroflot (ARO)'s control.

Eager to make a point, Filev snatched up a marker pen ("I like the green color," he said) and proceeded to sketch lines on a whiteboard to illustrate Russia's dismal mobility figures over the past two decades. Russia had 155 carriers with a valid air operating certificate (AOC), but just 45 million passengers flew in 2009.

As the price of consumer goods has fallen, and the cost of fares has risen, a new television has become more attractive to the Russian people than a flight across the country, said Filev. As a result, the nation's airlines are engaged in a "big, bloody war." Filev claimed (ARO) was forecasting having more passengers by 2020 than Airbus (EDS) and Boeing (TBC) separately expect to be carried by the whole of Russia's air transport network. The question, unspoken, is obvious (where will they come from?). "If everything is as (ARO) predicts, there will be no room for any other airline," said Filev, and slapped his forehead to emphasize how ludicrous he considered the notion. "It's a very low probability."

Filev also reserved scepticism for another of Russia's top three airlines, Transaero (TRX), the country's only passenger carrier to operate 747s and 777s. (TRX) carried about +10% more passengers than (SBR), but the nature of its operation means its traffic figure was +80% higher. Transaero (TRX) was renewing its fleet, having agreed to take 747-400s and 777s from two Asian operators.

"We are very interested in seeing how they will feed this capacity," said Filev, adding that he did not want to join impending "fighting" between Aeroflot (ARO) and Transaero (TRX), by bringing larger types into the (SBR) fleet. "I believe we'll wait until there's room. It's a bad idea to grow wide body capacity."

(SBR) must resist any similar temptation, he said, and pursue a more modest development strategy. "We think that, over the next 2 or 3 years, we should prepare the business for the next [phase] of growth," he added, stressing that the carrier wants to compete by becoming more efficient and cutting its expenditure.

"I believe operational excellence is key," he said. "The most important thing is how effectively we use our assets, our airplanes." (SBR) wants to squeeze more from its current fleet of 39 jets, which mainly comprises A320-family and 737 airplanes. That might not be easy. Filev claimed (SBR) was already recognized as having achieved the highest utilization of any carrier for its A319 fleet. He said (SBR) was wringing 11 to 13 hrs a day out of its A320 family and 13 to 14 hours from its 737-800s. Over 2011, (SBR) intended to increase utilization of its older airframes, which were running at nine to 10 hours a day.

Unlike Aeroflot (ARO) and Transaero (TRX), each of which have clung on to a small number of domestically produced jets, (SBR) operates only Western-built airplanes. "We have a Russian fleet as well," said Filev, then cackled mischievously. "But they're all grounded!"

Higher echelons of the Russian government had been less amused by the defection of the country's airlines from Tupolev and Ilyushin to Airbus (EDS) and Boeing (TBC). The depth of its wounded pride was demonstrated in dramatic fashion, when prime minister Vladimir Putin grilled (ARO) over its apparent desertion of the national aviation industry.

Filev admitted (SBR) has also faced a "little bit" of pressure over perceptions of its patriotism, all of which he appeared to have gleefully ignored. "We're a free people of a free country," he said, stressing that (ARO) is state-controlled, while (SBR) is privately-owned. "And it's our choice, and we follow the choice of our customers. I'm not against Russian airplanes. I'm against expensive airplanes."

Nothing has flagged (SBR)'s decision to adopt a slower, steadier strategy than its 2009 cancellation of its landmark order for the 787 (the airplane type originally intended to succeed (SBR)'s Soviet-era fleet with its costly appetite for fuel). (SBR) had agreed to take up to 25 787s, nudging aside (ARO) to become the first Russian carrier to order the twinjet "Dreamliner." Filev, whose office still sports models of the 787 in (SBR)'s distinctive colors, said the airplane is poised to "reshape the airline landscape."

"As an ex-military man, I know the importance of a new weapon," he said. "A new-generation airplane is like a new weapon. If we had the chance, we would try to have this airplane in our fleet. It was not a problem of belief in the airplane. The problem was a lack of cash. I needed my cash back." (SBR) had to divert the cash to fend off a financial predicament that emerged the year after its 787 order. Although its revenues increased by +35% to Rb42 billion/$1.3 billion, in 2008 (the year of the fuel-price spike) the carrier's yields sank and its net profit slumped to Rb73 million.

Filev said (SBR) was shouldering a debt of Rb13 billion in October 2008, at a time when banks were not offering financial assistance. Bringing this burden down was "very painful," he confessed, but (SBR) still managed to haul its indebtedness back to about Rb8 billion within a year, and by July 2010 the level was "quite comfortable."

(SBR) eased its financial pressures through an Rb8.9 billion line of credit with Russia's private Alfa Bank, which runs to 2014. A state-owned bank might have provided a cheaper loan, but Filev said: "Our choice was to work more with a commercial business."

He said the state could cut off finances simply by citing governmental policy. "They can forget about our small entity. They're not interested in damage to their balance sheet. When you speak with a private business, at least you can discuss money. It's always a question of price. When you speak with the government, you're never sure what the question's about."

Filev said the 2008 crisis "taught us a lot", but added: "I'm quite happy with the financial position. We have free cash now. It's very helpful for a better feeling."

(SBR) drove its costs down to 6.9 cents per available seat-km, Filev claimed, adding that (SBR) would be "happy to have 5.5 cents." Cost-efficiency is "our core idea", he added. "I believe we can push the costs down and make ourselves more competitive."

(SBR)'s mood for caution extended to its route network. "It's very simple for the coming years," said Filev. "We'll try to improve our operations and growth will be very limited. We'll make very few changes to our structure; we shouldn't change our schedule by more than >10 to 12% a year. It's not a massive change."

(SBR) has stopped the charter services of its travel division, Globus, because Filev believed the capacity could be put to better use on its scheduled network. "It's impossible for us to have, in the same entity, two different types of operation," he said.

Once (SBR) has settled, said Filev, there will be "room for growing". He added: "It's matter of cost. It doesn't matter if it's a merger or fleet [expansion], it's a matter of cost."

He hoped (SBR)'s access to the Oneworld (ONW) alliance network would provide a fresh influx of passengers and allow (SBR) to get a return for its intense efforts to meet the (ONW) alliance's requirements. "We're trying to be a more Western-style airline," he said. "If you don't know something, first you try to find people who understand your question."

Filev said (SBR) worked with Western consultancies and an experienced team of retired pilots (FC) to adapt its cockpit training and operations, while Airbus (EDS) and Boeing (TBC) also lent it their specialist knowledge. Lufthansa Technik (DLH) (LTK) provided the mentoring and organizational expertise to create a reliable system of maintenance and airworthiness support. Filev said the effort was "expensive," but the approval from (DLH) (LTK) was worth the investment. "From such an experienced [company], that's very important to us," he said. "It's the same story with sales and commercial management, always having to find people who understand better than anybody else."

Over its 18-month alliance implementation period, under the sponsorship of British Airways (BAB), (SBR) had working groups handling as many as 35 activity areas. "It made for us a massive job," said Filev. "You can see the result now: our procedures and standards accepted by the Oneworld (ONW) alliance."

Modernization is crucial to attracting the younger rouble. "We're trying to appeal to younger citizens," he added, pointing to the proportion of internet-based sales as evidence that it is reaching the youth market. Online sales reached 15% that year and exceeded the number of tickets bought at airline desks.

Not everything in Russia is keeping up with (SBR)'s pace. Filev griped about the country's air transport infrastructure. "We're never happy," he said, citing the lack of modern landing systems. "We always want a better deal. But Domodedovo (DME) airport is the best Russian airport." He also shrugged off the advantage (ARO) gained through Siberian overflight royalties. Russia's climate, atmospheric or economic, simply doesn't tolerate the weak. "We compete however we can, fair or unfair," said Filev. "Crying is for poor people. We live how we live. If someone is sitting in the castle, we'll wait. We're young. We have time."

Russia came to the budget airline party relatively late, and still only two airlines, Sky Express (SEX) and Avianova (ANV), with barely a dozen airplanes between them, identified themselves as low-cost carriers (LCC)s. But Filev doubted that the country could sustain the budget airline model. "Low-cost carriers (LCC)s don't create anything reasonable," he said. "To be competitive, a low-cost carrier must be -20% less [in its cost base]. I think it's unreachable." Achieving this margin would mean pushing the cost per available seat-kilometer (ASK) towards the 5¢ mark. But Filev said aspects of the air transport system that "fundamentally define" low-cost operations, simply "don't exist" in Russia. There are no secondary airports, which means budget carriers have to negotiate rates alongside full-service carriers, he said. "And I have better prices than anyone else in the main airports." Budget airlines also need relatively short sectors to ensure adequate utilization. Filev brought up an internet map on a wall-mounted screen in his office, pointing out the distances between Moscow and other major Russian cities. He questioned whether there are enough population centers within range. The budget market, reliant on high loads, faces the same population mobility problems as other Russian carriers. There is also high customs duty on imported airplanes (forcing Avianova (ANV) to reduce the seating capacity on its A320s), which makes revenue maximization tough. "We don't have low-cost airlines in Russia. We have low-fare airlines," said Filev. "They're playing a game where there's no possibility for the investor to win."

Nothing contrasts with Vladislav Filev's pro-Western leadership of (SBR) more than his earlier life as a nuclear "Cold War" warrior. After graduating from the military space academy in St Petersburg, he joined the army and served in the Soviet Union's strategic missile forces. In the year he signed up, 1985, the Soviet leadership underwent a radical change, when Mikhail Gorbachev became General Secretary of the Communist Party. Filev left in 1993, as Russia grappled with the shedding of communism and the uncertainties of its new free-market economy. He adapted to the business environment, becoming Chairman of investment company, Eurofinance-Novosibirsk before joining the board of (SBR) in 1997. Filev described (SBR) as a family business; his wife, Natalya, has been a major shareholder.

ANTON ERIMEN, CHIEF EXECUTIVE OFFICER (CEO).
Anton was formally Director Commercial.

MS NATALIA FILEVA, GROUP GENERAL DIRECTOR, (S7) GROUP OF COMPANIES.

VLADIMIR OBIEDKOV, GENERAL DIRECTOR (S7) AIRLINES (SBR).

VLADIMIR OBYEDKOV, CHIEF EXECUTIVE OFFICER (CEO) (S7) AIRLINES (SBR).

VADIM BESPERSTOV, DEPUTY CHIEF EXECUTIVE OFFICER (CEO) STRATEGY.

ALEXANDER VINDERMOUT, DEPUTY-DIRECTOR GENERAL OPERATIONS.

YEVGENIY CHEMYSHOV, GENERAL MANAGER NOVOSIBIRSK & CENTRAL ASIA.

SERGEI CHERNOV, DIRECTOR ENGINEERING.

VITALY MINYUKOV, DIRECTOR INFORMATION TECHNOLOGY (IT).

VLADIMIR PEREKRESTOV, DIRECTOR PLANNING & CONTROL.

ALEXEY ZAITSEV, DIRECTOR INFORMATION, ANALYSIS & NEW TECHNOLOGIES
(T: 7-3832) 599-074).

ILYA ALEXANDROVSKY, FINANCIAL DIRECTOR.

OLEG VASILIEV, DIRECTOR TRAINING.

IGOR VERETENNIKOV, GROUP COMMERCIAL & STRATEGY DIRECTOR.

ANTON MATTIS, HEAD CARGO DIVISION.

 
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