Founder leaving firm
Russian air cargo group in turmoil after sanctions. Russia’s Volga-Dnepr Group is facing significant problems due to the international sanctions that followed Russia’s invasion of Ukraine. Now the company is parting ways with the chairman of its board of directors and half of its pilots.
According to a report in the Moscow daily newspaper Kommersant, the founder and major shareholder of Volga-Dnepr Airlines, Alexey Isaikin, wants to sell his shares in the group and hand over the leadership to the management. There was no information concerning a possible severance payment.
The background to the move is that the businessman has been on the United Kingdom’s blacklist since June. London sanctioned Isaikin, who holds a Cypriot passport in addition to his Russian citizenship, as the head of a transport company “with significant air operations for and contracts with the Russian government to build air bridges for critical goods”.
Isaikin, who is now 69, founded the firm in 1990 and built it into one of the most successful airfreight operators in the world. Last year, the Volga-Dnepr Group transported approximately 725,000 t of goods in its national and its international operations. This equates to approximately half of Russian airfreight volumes. Turnover amounted to RUB 233 billion (about EUR 2.8 billion at the end of last year), and profits stood at around RUB 62 billion (EUR 740 million).
Boeing fleet grounded since March
But the invasion of Ukraine launched by Russia earlier this year has made the situation extremely bleak for the airline. The operations of Western subsidiaries, such as the UK’s CargoLogicAir and CargoLogic Germany are blocked by sanctions. Bankruptcy is looming over the German company.
The 27 Boeings in the group’s inventory have been grounded since March, due to a lack of insurance and spare parts, as well as to problems with leasing companies. One consequence is that the Volga-Dnepr subsidiaries AirBridgeCargo and Atran are dissolving their Boeing fleets. The 200 or so pilots employed there have been laid off. This corresponds to approximately half of all of the group’s team of pilots.
The company’s fleet has thus been reduced to twelve Antonov AN-124 Ruslan wide-body freighters and five IL-76 transporters. These are in continuous service in Asia and Africa. But the orders they generate are only worth a fraction of what they were last year, and even promised Russian state aid of around EUR 15 million isn’t enough.
Isaikin hopes that his withdrawal will reduce the pressure being brought to bear on the group, and help to revive talks about a joint venture with Etihad Airways, which previously came to nothing. Whether this will succeed remains to be seen. Although the sanctions are aimed at Isaikin, because of Volga-Dnepr’s strategic importance they’re likely to be extended to his successor too, or even to the company as a whole. The future of Volga-Dnepr remains uncertain.