(Updates sourcing, adds background)
MOSCOW, Sept 1 (Reuters) - Russian state airline Aeroflot said on Tuesday it would acquire a 75-percent stake in struggling competitor Transaero, creating one of the world’s largest air transport companies.
The transaction, which underlines the Kremlin’s determination to support ailing industries, throws a lifeline to the struggling private airline, whose net debt totalled 106 billion roubles ($1.63 billion) at the end of last year.
“Transaero will be completely overhauled and integrated into the Aeroflot group,” an Aeroflot spokesman was quoted as saying by RIA news agency.
Passenger numbers for Transaero, Russia’s second biggest airline, increased by 2.7 percent in the first seven months of 2015. However, it and other Russian airlines have been hit hard by the country’s economic crisis as consumers have turned away from lucrative international flights, leaving carriers to struggle with unprofitable domestic routes.
The deal was agreed earlier on Tuesday at a meeting with Russia’s First Deputy Prime Minister Igor Shuvalov, Transaero said in a statement. An industry source said Aeroflot would purchase the 75-percent stake for one rouble.
The news sent Transaero shares up by almost 40 percent, whilst Aeroflot stocks slipped by 5 percent on the Moscow Exchange.
The Russian aviation industry lost around 30 billion roubles ($461.18 million) last year, according to the Russian Association of Air Transport Operators, compared with a 4.7 billion rouble loss in 2013.
Aeroflot itself on Monday reported a net loss of 3.54 billion roubles ($54.42 million) for the first six months of 2015, compared to 1.91 billion roubles a year ago. Passenger numbers were up 8.7 percent year-on-year in the same period, the company said.
$1 = 65.0500 roubles Reporting by Gleb Stolyarov; Writing by Jack Stubbs; Editing by Gabriela Baczynska and Andrew Osborn