Siberian Carrier Flourishes on UN Re-employment of Mi-26 Helicopter

Andrei Martirosov, general director of TyumenAviatTrans (TAT), reported at a recent press-briefing in Moscow about a substantial increase in orders from both local and domestic customers for services the airline offers.

In 1999 TAT signed commercial agreements with Heyns Helicopters of South Africa for the dry lease of eight Mi-8MTV1 helicopters and with Elak KFT of Mozambique for the lease of three Mi-8s. Over the past year TAT has also won UN tenders for helicopter services in Western Sakhara, the Central African Republic, Mozambique, Indonesia (Eastern Timor) and Sierra Lione. A number of contracts were signed for An-24 and Yak-40 airlines on behalf of the UN and various agencies of small countries. In all, foreign activities brought the airline an income of $4 million in 1999. These accounted for merely 4% of the company's income of Rbs 0.93 billion in 1999, but Martirosov says that there is a real chance to increase the share of foreign orders in the near future up to 50%. There is some ground for such hope: in 1996 UN orders amounted to $0.3 million, the following year the figure rose to $4.0 million, while the order book for 2000 is already $21 million. Meantime, requests from various foreign entities are said to be estimated at $40 million.

TAT was founded in 1991 on the assets of several Aeroflot branches in Western Siberia as a joint stock company with 100% interest of the state. Later, the majority of the shares was distributed to company employees and sold on the market, while a relatively small part of the base capital was allocated for support of first-level ADRs issued in January 1998. As of today, the company's base capital is divided between the state (2%), foreign investors (30%), Russian investors (33%) and individuals 26%, with the remaining 9% allocated for ADRs.

In 1999 TAT generated 43.4% of its income on regular passenger services, 4.1% on international activities, 45.4% on helicopter services inside Russia and 3.3% on charter flights. Orders from oil companies accounted for 38% of TAT's activities in 1999, natural gas companies for 22%. A further 5% was for patrolling power lines, 10% on flying medical services and 4% on geological missions. Such a high share of orders from oil and gas companies is explained by the fact that TAT is headquartered in the city of Surgut, dubbed as the Oil Capital of Russia. The share of the Tyumen Region in Russia's output of oil and natural gas is 70% and 90% respectively.

Martirosov says that the company easily wins foreign orders because it has built up a strong customer base inside Russia. In 1999 Surgutneftegaz, a large local oil company, increased its volume of orders by two times up to $10 million. For the year 2000 Surgutneftegaz awarded TAT Russia's largest annual order for helicopter services worth $15 million. A large order was awarded by Sibneft oil company for Tu-154 airlines for the conveyance of oil shift workers. Sibneft also placed an order for use of the heavy Mil Mi-26 helicopters - these will be employed for aerial drilling of new oil wells. More orders are being placed for finding locations of new oil and gas fields.

Tight business relations with large oil companies helped TAT survive the sharp rise in fuel prices last year allowing it to get fuel on very favourable terms. In fact, the share of fuel in TAT expenses last year was surprisingly low for a Russian airline, at 18.7%. And although the airline did not escape a drop in passenger traffic in 1998 and 1999 as a result of the countrywide economic crisis, it managed to increase its operational profit by 26% by more effective use of the fleet (for instance, the seat loading factor rose from 59.1% to 66.4%) and optimisation of the company's structure. Still, the traffic did not drop that much, and, according to the official 1999 statistics, stabilised at 0.4 million passengers carried and 0.7 billion km passengers of aerial work.

Optimisation of the company's structure led to job cuts, with the number of employees dropping from 4367 in 1998 down to 3729 in 1999. In April 2000 the workforce was further reduced to 3540 people. This number is considered sufficient to achieve a major breakthrough this year by increasing the overall traffic over the level of 1 billion km passengers.

TAT runs a large fleet of some 300 airplanes and helicopters, including 6 Tu-154M, 2 Tu-134 and 22 Yak-40 jetliners, 11 An-24 turboprop commuters, 2 An-26 freighters and 52 An-2 single-piston biplanes. The helicopter fleet consists of 134 Mi-8T, 19 Mi-8MTV/AMT, 7 Mi-10K, 9 Mi-6 and 15 Mi-26T aircraft. The six largest airliners of the Tu-154M type were acquired new from the Samara-based Aviacor factory in 1995-1999. This year Aviacor should deliver a Tu-154-100, the most recent derivative of the type.

Big hopes are placed on the Mil Mi-26 helicopter, currently the world's large rotorcraft with maximum takeoff weight of 56 tons and payload capability of 20 tons. The giant is not easy to maintain, so many commercial operators of the type lost interest in it in the past few years. Currently, TAT is the only Russian commercial airline that operates the Mi-26 and offers its services to both domestic and foreign clients.

After a break that lasted for almost five years, the UN made the decision to re-employ the Mi-26 on its humanitarian relief operations after the aircraft had acquired proper civilian certification. In many cases the heavyweight Mi-26 is the only means to deliver heavy equipment to certain places in Africa and Asia. To be able to fulfil domestic and international demand in Mi-26 services, in December of the past year TAT signed a contract with the Moscow Helicopter Plant named after Mil for delivery of two airframes. The first aircraft was delivered by year-end. Funding for this deal was arranged with the help of Petrokomers bank's credit for TAT. Separately, the Siberian company ordered one Mi-8AMT helicopter from the plant in Ulan-Ude for delivery later this year.








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