Citing an unnamed source, the Interfax news agency has reported that Russia is planning to spend 107 billion roubles (about €1.35 billion) from the National Wealth Fund (NWF) to recapitalise Aeroflot, in an attempt to moderate the damage of the sanctions imposed by the west after the invasion of Ukraine.
Since the war has begun, the EU and the US, among other countries, have imposed serious sanctions for Russia, in an attempt to determine president Putin to cease his invasion. Removing the country from international payment systems and banning its aircraft’s access to foreign airspace, as well as interrupting the lease of planes and supply of parts, have resulted in a serious blow to its economy.
To reduce the impact of these sanctions, Putin announced a series of measures, like nationalising international businesses and stealing leased aircraft. In a meeting with his cabinet, he stressed that “The economy will, without doubt, adapt to the new situation” and the country will get through this period. The intention to use money from the NWF to buy Aeroflot shares is just the latest move of the plan to rehabilitate the economy.
The fund accumulates the Russia’s oil revenues and, according to Reuters, its assets were estimated at €144.5 last month. Out of this, 107 billion roubles (about €1.35 billion) will be used to buy into a new share issue of Aeroflot, via an open subscription, while an additional 57 billion (about €713,000) will be used to help other Russian airlines pay their debts, by acquiring equity stakes.
Before the invasion, Russia had already spent 80 billion roubles (about €1 billion) on Aeroflot shares to help it cope with the impact of the coronavirus pandemic, amounting to 57.34% of the company. As a result of the new share sale, the government’s stake must not fall under its current ownership percentage, according to Interfax’s report.
So far, neither Aeroflot, nor the Russian finance ministry have responded to requests for comment from Reuters.