Aeroflot’s fortunes take off in Russia

Aeroflot was once synonymous with Soviet inefficiency, with its delayed departures, aging planes and rude service. Despite that legacy and a recent downturn in the Russian economy, Aeroflot has turned things around, rising in global airline-quality rankings and becoming a darling for investors. Its stock price on the ruble-traded Micex index doubled in less than a year. Good performance, however, has perils for a state-owned company. Last September, the government promoted Aeroflot’s takeover of 75% of closely held competitor Transaero Airlines, which analysts said was saddled with about 250b rubles, or roughly $3.9b, in debt. The state eventually backed off, but the abandoned Transaero deal—which Aeroflot board members said was put up for vote with little warning—underscored how exposed the carrier can be to government whims that run the gamut from mandatory purchases of Russian-made planes to below-market rates on domestic travel. When the Soviet Union existed, Aeroflot ranked as the world’s largest airline by traffic. But when the country fractured in 1991, so did the carrier. A wave of government-inspired consolidation has helped the airline regain its top status in the country. Globally, Aeroflot last year was the 22nd-largest airline by traffic, according to the International Air Transport Association. In recent years, that expansion has been accompanied by improvements. Story has further details.<br/>