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. Last Updated: 07/27/2016

Financial Results Up For Carrier

Regional carrier Tyumenaviatrans has stunned the industry with thumping financial results for the first half of this year, but analysts say that two of the three major growth factors could fizzle out in the near future.

"We have conducted broad restructuring, centralizing cash flows in the holding company," said Igor Petrov, deputy financial director with Tyumenaviatrans, in a telephone interview Friday.

The western Siberia-based airline reported a half-year profit of 236 million rubles ($8 million) on sales of 895 million rubles, up 200 percent and 141 percent in dollar terms, respectively.

The number of passengers carried increased 63 percent, cargo transportation was up 16 percent, and flight time surged 36 percent in the six months.

While paying tribute to the management team’s efforts to overhaul the air carrier, analysts said its sales could shrink in the future.

"Contracts with the United Nations are a one-time event, and so far, the company has not secured any for the next year," said Yelena Sakhnova, air transportation analyst with Aton brokerage. "Second, its revenues in large part come from the oil companies, whose performance improved in the wake of recent oil price gains."

The firm had saved on tax payments, mostly on sales taxes, by forcing its regional branches to delegate all financial powers to the headquarters, she added.

It also restructured most of its tax arrears, which weighed heavily on the financial results in the previous period.

"It is more advantageous to restructure debts than repay them at face value," Tyumenaviatrans’ Petrov said. "We do have the funds to pay tax arrears, but that would eat into our working capital."

The company owes 892 million rubles to municipal and federal administrations and nonbudget funds, with fines and penalties for overdue payments worth about 60 percent of the total debt.

Tyumenaviatrans will bring in $20 million under one-year contracts with the United Nations, but this source of revenue, which might make up a third of the company’s total sales this year, is not likely to affect its performance next year.

The United Nations uses Tyumenaviatrans’ fleet of Mi-26 heavy-lift helicopters in several of its special missions around the world.

Tyumenaviatrans’ home airport in Surgut, Western Siberia, provides it with a shortcut to the swelling coffers of the oil companies, but when the oil price bonanza comes to an end, the air carrier might see its revenue base take a hit. Oil major Surgutneftegaz alone accounts for 15 percent of Tyumenaviatrans’ annual sales, according to Aton’s estimates.

"The longer-term outlook is uncertain, due to the company’s weak position in the international cargo market and its limited ability to upgrade its domestic passenger fleet," said Andrei Ivanov, analyst with Troika Dialog, which rates Tyumenaviatrans as short-term outperform.

The company’s improved performance this year is in sharp contrast with results for 1999, when the number of passengers it carried dropped 16 percent compared to an average decline of 4.2 percent across the industry.

This year, its traffic, calculated as kilometers flown, increased 56 percent compared to an industry average of a 14.6 percent decline in January-May.

Last year, its passenger loads was at 66.4 percent above the average of 55.9 percent and it further improved to 67.4 percent in the first half of this year.

Tyumenaviatrans ranked third in a list of domestic carriers published by the national transport and clearing chamber and the Russian Association of Air Carriers. It followed Aeroflot and Pulkovo in the first six months of this year.