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. Last Updated: 07/27/2016

Aeroflot Gives Sheremetyevo-3 Wings

VedomostiAeroflot is offering Sheremetyevo and other potential investors the chance to join it in building the long-awaited third terminal.
With the government yet to select a manager for Sheremetyevo Airport, its main tenant, state-controlled flag carrier Aeroflot, has decided to go ahead with the long-delayed construction of the airport's third terminal.

Aeroflot's board decided late Monday to set up a subsidiary, to be called OAO Terminal, to build it -- and is offering Sheremetyevo Airport and other potential investors the chance to join it in the project, the airline said in a statement Tuesday.

Aeroflot said the new terminal was vital for the airline's development, citing in particular the transit market.

"This task can be achieved by launching a new terminal that will offer convenient connections between domestic and international flights and allow Aeroflot to increase passenger numbers by 25 percent annually," the company said.

Aeroflot CEO Valery Okulov has said the airline's passenger numbers, which stood at 5.5 million last year, could double by 2010.

Aeroflot has spearheaded efforts to build a third, $300 million terminal for 8 million passengers at Sheremetyevo to relieve the airport's two existing terminals, which have long worked at overcapacity. The airline has cited the lack of a dedicated terminal as a stumbling block in its negotiations to join one of the leading global airline alliances.

Sheremetyevo-3 was originally scheduled to be unveiled already this year, but work has not moved much beyond land clearance since the groundbreaking ceremony in February 2001.

Aeroflot says it has invested between $10 million and $15 million into the terminal project, stalled due to wrangling between Sheremetyevo, the government and the airline over equity shares in the company that will build and run the new terminal.

The subsequent delays in building the terminal were cited in the sacking of two Sheremetyevo general directors, and contributed to the airport losing carriers, including British Airways, to cross-town Domodedovo Airport.

But Aeroflot did not specify when the subsidiary, with charter capital of 200 million rubles ($6.65 million), would be established. Spokeswoman Irina Dannenberg said other participants' shares had yet to be determined.

It is also unclear how Aeroflot's latest initiative will fit into the government's planned tender for a private manager of the Sheremetyevo complex, which is expected to go ahead later this month.

At its Oct. 30 board meeting Sheremetyevo is to approve conditions for the tender, which were drafted by the Property Ministry and signed off by Prime Minister Mikhail Kasyanov early this month.

Russian companies with assets of at least $2 billion will be invited to submit bids by Dec. 1, and a winner will be announced four days later.

So far, Sistema, National Reserve Bank -- which holds 30 percent in Aeroflot -- and Alfa Group have expressed an interest in bidding. Earlier this year, Alfa Group president Mikhail Fridman offered to take over the overcrowded airport and build the new terminal.

Sheremetyevo declined to comment, saying only that the airport had not yet received an offer from Aeroflot.

NRB president Alexander Lebedev has called for the tender to be postponed, saying that Aeroflot and Sheremetyevo were capable of solving the airport's problems without the involvement of a private manager.

Igor Baranovsky, the vice president of Alfa Eco and the head of recently established Alfa-Sheremetyevo, said Tuesday, "We do not agree with this approach. They [Aeroflot] can set up whatever they want, but it won't be right until we have a general picture and development concept."

Baranovsky said Alfa was confident of winning the management tender and it would then invite consultants to look at proposals for Sheremetyevo-3.

"I understand that Okulov has long wanted to build it," he said. "But first, he hasn't got the money, and second, he has to get government approval. ... There is no clearly identified concept yet on the new terminal."