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. Last Updated: 07/27/2016

Ownership Mystery Hits Aeroflot's S&P Rating

Standard & Poor's international rating agency downgraded Aeroflot's corporate governance score after it failed to hear from the carrier's new shareholders, the agency said.

S&P had awarded Aeroflot a 5.3 out of 10 in March, but then brought the airline's score down to 4.6 on Tuesday, citing concerns over ownership as the main reason for the downgrade.

"This action reflects recent confirmation by Aeroflot's management that a significant change in ownership has occurred, resulting in one shareholder group acquiring a blocking minority of more than 25 percent and the absence of any management identification of the new shareholders," S&P said in its statement.

Earlier media reports suggested that 29 percent of Aeroflot's shares had been acquired by companies close to Sibneft tycoon and Chukotka region Governor Roman Abramovich.

S&P said before Aeroflot's annual shareholders meeting May 19 that it would review its rating and could even consider an upgrade if the new shareholders made their plans for the airline public. But they didn't.

The worst hit of the four categories were "ownership structure and influence," downgraded from 4.5 to 3, and "board and management structure and process," from 3.8 to 2.8.

S&P lamented the fact that there are no independent members on the new board of directors following the resignation of David Herne of Brunswick Capital Management.

Aeroflot spokesman Alexander Lopukhin called S&P's decision "a little surprising" and one that "worries" the company. "As for the new shareholders, it's not up to us to choose them," Lopukhin said. "We hope it's a temporary downgrade and that our improving operating performance will help recover our standing," he added.

"The news is unlikely to have a major effect on the share price as the change was expected by the market. In fact, we do not anticipate any movement in the share price until the new strategic investor clarifies its position on the management and its strategy, which may be several months," Troika Dialog said in a comment Wednesday.

Also Wednesday, Aeroflot continued negotiations with its technical ground crew to avoid a potentially crippling strike that the ground crew's union is threatening to call June 30.

The strike could damage the flagship carrier's lucrative summer season, but the company is nonchalant.

"We're continuing talks with the technicians. Even if the strike goes forward, nothing terrible will happen and flights will not be disrupted," Lopukhin said.

The head of the technicians' union, Viktor Kleschenkov, reiterated Wednesday the group's intention to strike and did not rule out the possibility that planes would be delayed.

The airline also is attempting to prove that a one-hour stoppage May 13 by its technicians, which delayed 14 planes and entailed a loss of 1.4 million rubles ($47,000) was illegal.

That case was heard in a Moscow court Wednesday and was set to continue Thursday.