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. Last Updated: 07/27/2016

Decision Near on Ailing KazAir's Fate

ALMATY, Kazakhstan -- Kazakhstan's government, which slammed Kazakhstan Airlines in a recent inquiry for improper safety standards and deepening losses on international routes, will decide the fate of the state carrier early next week.

A government meeting has now been scheduled for Monday to discuss the future of KazAir, Serik Buranbayev, head of the transport ministry's aviation department, said Friday.

Prime Minister Akezhan Kazhegeldin will convene a further meeting of "all interested parties" Tuesday to find a solution to the crisis, Buranbayev said.

An April 1 deadline to find a solution passed amid mounting local media pressure for action. Passengers are increasingly being left stranded by cancelled or delayed long-haul flights.

Officials brought in to turn around the company have blamed the government for creating artificial competition and a dive in passenger numbers caused by the economic slump.

KazAir controls domestic travel and runs 21 airports in a network built up under communist rule to cover a country which has just 17 million people but is five times as big as France.

The inquiry, led by First Deputy Prime Minister Nigmatzhan Isingarin, concluded that the debt-ridden airline should be separated from the profitable airport operations KazAir also controls under an aviation monopoly created in 1993.

An inability to pay for fuel had caused cancellations and led to "paralysis of the company's work," it said. Worse, the airline fleet was not being serviced properly, and would soon cease to be fit for international flights.

The report also said an audit by accountancy firm Deloitte and Touche found that 2.9 billion tenge ($45 million) was owed to the airline, of which 2.5 billion may not be recoverable.

The airline owes 3.1 billion tenge, including 460 million tenge for fuel.

"Material, technical and financial resources are expended without control," the report said.

Disputes have broken out over dealings with overseas agents, the inquiry found. An Ilyushin aircraft has been seized in the Netherlands and cases have been brought by other agents in Turkey, the United Arab Emirates and Korea.

KazAir officials said the airline faced financial problems but emphasized the company was solvent. Instead of being broken up, they want central management control over a diffuse structure of 28 subsidiaries to be strengthened.