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. Last Updated: 07/27/2016

Alfa May Start or Buy Low-Cost Airline

bloombergWizz Air denied reports appearing in the media Friday that a stake in the airline was bought by Alfa's investment arm.
Billionaire Mikhail Fridman's Alfa Group might buy or start a low-cost airline to tap Russia's surging travel market, the company said Friday, denying a report that it bought a stake in Budapest-based Wizz Air.

"We haven't bought anything, but we are studying the low-cost market and we have a certain interest that hasn't yet materialized,'' said Igor Baranovsky, head of Alfa's investment arm, A 1, declining to elaborate.

"This market has low penetration, only 3 percent of the population fly,'' Baranovsky said. "This is not because people are afraid of flying, but because tickets are expensive. If we create such a company, then through the volume of operations we may get interesting financial results."

RBK Daily reported Friday that A 1 bought an unspecified stake in Wizz Air from U.S.-based Indigo Partners, citing an unidentified person familiar with the deal. The newspaper said A 1 was hiring staff for a new airline called Phoenix that will be based on Wizz Air and in Moscow.

"This is totally groundless," Wizz Air spokeswoman Natasa Kazmer said. "This is monstrous silliness.''

Billionaire Alexander Lebedev is among the Russian businessmen planning to establish a low-cost carrier in the country to benefit from surging demand. Russian airlines flew 14.8 million passengers in the first half of this year, 9.2 percent more than in the same period last year.

Boris Abramovich, co-owner of the country's fifth-largest airline, KrasAir, plans to create a low-cost carrier in the country with the help of the European Bank for Reconstruction and Development, Vedomosti reported in September.

Abramovich is also competing for Hungary's unprofitable national airline, Malev, as he looks to enter the European Union and connect the Hungarian carrier to his Air Union alliance serving Russia and Asia.