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Ministry seizes planes from Slovak Airlines

The national air carrier Slovak Airlines (SA), which was operating without a license since January 1, ran into greater trouble when on January 15 the Transport Ministry seized its planes, which had come as part of a Russian debt settlement.
"One cannot speak of their confiscation since they were [already] state property," Transport Minister Gabriel Palacka said at a January 18 press conference. He added that experts will asses the aircrafts while the ministry holds a public tender for their best use either through leasing, sale, or the capitalization of state participation in a company. SA can also enter the competition, under the condition that it settles all its debts.


Planes like this one have been seized from Slovak Airlines by the Ministry of Transportation, effectively grounding the carrier for now.
photo: TASR

The national air carrier Slovak Airlines (SA), which was operating without a license since January 1, ran into greater trouble when on January 15 the Transport Ministry seized its planes, which had come as part of a Russian debt settlement.

"One cannot speak of their confiscation since they were [already] state property," Transport Minister Gabriel Palacka said at a January 18 press conference. He added that experts will asses the aircrafts while the ministry holds a public tender for their best use either through leasing, sale, or the capitalization of state participation in a company. SA can also enter the competition, under the condition that it settles all its debts.

The previous government decided to establish a national air carrier Slovak Airlines a.s., in January 1997. SA was to be given, as then-Transport Minister Alexander Rezeš announced, Russian airplanes that were to be imported as repayment of Russian debt towards Slovakia. Rezeš claimed that the import of the four airplanes was to squeeze the Russian debt below $1 billion.

The major original shareholder in SA, with a 33.5% stake, was the Devin Group, a subsidiary of Devin Bank, which was commissioned to settle the Russian debt. The second major shareholder was reported to be a private travel agency called Willi. Russian capital is involved in both shareholders. OKB Jakovlev with exclusively Russian capital is reported to own 3.2%, and Cassovia Košice is another Slovak shareholder. The state took a 34% stake in SA.

Palacka said that although the government invested up 34 million Sk in SA, it has gained no shares in the company. "If it turns out that we do not hold shares, those who are responsible will have to return the money illegally gotten from the state budget."

Palacka also said that contracts on the airplanes were signed under unusual circumstances. As far as the Transport Ministry knows, Viliam Veteška, president of the SA board of directors, imported the airplanes and the company began using them although the state had not formally taken them over. Slovakia wrote off about $16.8 million for each plane from its claims towards Russia, but now their real value is between $3-6 million per plane. "We paid $50 million through writing off these planes, and now we have just $15 million. The question is, where is the remainder of that sum?" Palacka asked.

The ministry refuses to consider contracts on the airplanes as valid because they have never been the property of the ministry. Moreover, two of the contracts were signed without the necessary consent of the Finance Ministry, which is a condition for their validity.

Another vexing factor is the contents of the contracts, according to which SA will pay lease installments for the planes over a period of 25 years, although the depreciation period for these airplanes is eight years. Moreover, the first lease payments would be made after the planes had been in use for three years. This is why the ministry is to reassess the existing contracts. The ministry will also investigate a loss of more than 100 million SK, which SA reported for last year, despite zero costs for airplanes.

Slovak Airlines have operated a single regular line between Bratislava and Moscow twice a week.

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