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. Last Updated: 07/27/2016

KrasAir to Lease 10 American Planes

Frustrated in its attempts to lease locally built aircraft, Krasnoyarsk-based KrasAir is negotiating with German charter operator Germania to create a joint leasing company and add eight Western jets to its fleet, officials with the state-controlled airline said Thursday.

KrasAir management met with Germania chief Hinrich Bischoff in Krasnoyarsk on Thursday, and will finalize the agreement in Germany in two weeks, KrasAir spokeswoman Svetlana Volodina said in a telephone interview Thursday.

Volodina would not detail the structure of the new company, saying only that the company will be registered in Krasnoyarsk. "The contribution of each side and share in equity are still under discussion," she said.

Germania is a private airline which operates scheduled flights from Berlin to Frankfurt, Cologne and Tbilisi, and charter flights in the Mediterranean region. The airline is a contractor for German tourist giant TUI Group.

Volodina said KrasAir's chief interest in Germania is eight McDonnell Douglas MD-83 passenger jets it plans to lease from the company, a deal analysts say will cost the No. 4 airline -- which operates a fleet of 44 Russian-built aircraft -- $12 million to $14.5 million per year.

The additional planes, to be added to the airline over the next two years, will meet KrasAir's growth ambitions. "We have a shortage of aircraft, even on domestic routes," Volodina said. KrasAir carried 880,000 passengers in the first eight months of 2002, a 26 percent jump from the same period last year.

"The planes will in time replace Tu-154s," Volodina said. "The MD-83 carries the same number of passengers as the Tu-154, but burns half as much fuel."

Volodina said the decision to use Western aircraft was based partially on KrasAir's disenchantment with leasing domestic aircraft. KrasAir operates two leased Tu-204s, but is still waiting for a third Tu-204 that was due more than a year ago.

Earlier this year, KrasAir announced plans to lease two Boeing 767s from an Australian leasing company. The first one is due in October and the second in November, Volodina said.

Independent aviation analyst Paul Duffy said while the MD-83 makes financial sense and will save KrasAir $1.5 million in fuel bills per aircraft per year, Russia does not have many runways physically strong enough to support the plane.

Yelena Sakhnova, analyst with United Financial Group, said the company's finances will be hit hard if it has to pay the combined 40 percent of import duties and VAT.

KrasAir marketing director Andrei Yegorov said the airline is considering a number of ways by which it can avoid paying the full tax rate. He did not elaborate.