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. Last Updated: 07/27/2016

Partners Reach Deal on Sheremetyevo Terminal

Sheremetyevo Airport and its largest tenant, Aeroflot, agreed on Tuesday to build the long-awaited Sheremetyevo-3 terminal together, putting aside years of disputes.

The third terminal, which will have a capacity of 9 million passengers per year, will be built at a cost of $430 million and completed in 2007.

Spearheaded by Aeroflot, work on the new 168,000-square-meter terminal first began in 2001 but was stalled due to a dispute over the terminal's ownership with Sheremetyevo management and government officials.

Under the new agreement, Aeroflot will hold 30 percent in Sheremetyevo-3, Sheremetyevo Airport will receive 25 percent plus one share and the rest will go to banks, primarily to state-owned Vneshtorgbank.

"We now have a common understanding on how Sheremetyevo should develop," said Sheremetyevo general director Mikhail Vasilenko.

Earlier plans to give a minority stake to an international operator have been dropped, said Mikhail Polubyarinov, deputy general director of Aeroflot.

He said that it would take three to four months for Sheremetyevo and the banks to pay for their shares in the third terminal, which is currently 100 percent owned by Aeroflot.

The overhaul at Sheremetyevo will also include a $310 million upgrade of the Sheremetyevo-2 terminal and the construction of a gallery that will connect it to Sheremetyevo-3, Vasilenko said.

Sheremetyevo-1 will also be upgraded to increase capacity to 5 million passengers per year.

Vasilenko said the upgrades would be financed partly by loans and partly by the companies' own resources, but did not elaborate.

The overall capacity of the entire Sheremetyevo complex will be boosted to 30 million passengers per year by the end of 2007. The airport handled 12.8 million passengers last year.

The new terminal is vital for Sheremetyevo if it is to compete with its crosstown rivals, Domodedovo and Vnukovo airports, which are being expanded and modernized.

Over the past few years, the aging, Soviet-built Sheremetyevo has lost many of its clients, including British Airways, to Domodedovo.

This year, Domodedovo overtook Sheremetyevo for the first time in passenger numbers.

In the first seven months of the year, Domodedovo handled 7.5 million passengers, while Sheremetyevo served 6.8 million passengers.