Russian Prime Minister Dmitry Medvedev has given the green light to begin bankruptcy proceedings for Transaero airlines, according to sources cited by online newspaper Gazeta.ru. Negotiations on a takeover of Russia's second-biggest carrier by Aeroflot have been deadlocked. According to sources, Aeroflot took a hard line refusing the Transaero consolidation.
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Russia's federal aviation service has told Transaero to stop all ticket sales, TASS reports.
The banks are opposed to the bankruptcy, but Aeroflot says they should have better assessed the risk when they gave loans to Transaero. According to Aeroflot, the airline had an extremely risky strategy in staying afloat.
Transaero is in such financial straits that it can’t refuel its planes, which is now done by Aeroflot. It said it would stop refueling Transaero planes on September 30, but First Deputy Prime Minister Igor Shuvalov asked Aeroflot to move the deadline to midnight October 2, Russian business media
RBC reported..
At the beginning of September, Aeroflot said it intended to acquire a 75 percent stake in Transaero, which has about a $4 billion debt. Aeroflot's main shareholder is the Russian state, which owns 51 percent stake in the carrier.