Is Transaero about to come back?

Almost a year to date after its bankruptcy, rumors have emerged that Transaero may be about to make a comeback.

In late 2015, what once was Russia's second largest airline had to stop all its flights and send its fleet to storage in Spain, after its inability to service its financial obligations after having accumulated some $1.2B of debt.

Although its planes are no longer flying, the company still exists as a legal entity and it ooks like its creditors have not given up yet. Under the new plan and after some financial engineering that would see all liquid assets, inclusding the brand, transferred to a new entity free of debt, these creditors could eventually become shareholders in the new Transaero.

The new airline would be smaller than its predecessor and a lot more focused both in terms of fleet and geographical reach. For a started, it would be restricted to domestic operations, at least during the first two years of operations, as required by Russian law, and it would focus on cities like St.Petersburg, Krasnodar and Sochi, rather than Moscow. 

When it comes to fleet, it would be 10 Boeing 737-800 and 5 Sukhoi Superjet SSJ100 for a starter and may then increase it, and, when they become available maybe even get some new Russian-made MC-21 airliners. All aircraft are expected to be financed through leasing arrangements.

It has been estimated that a fresh investment of $75M over the next couple of years could get Transaero up in the air once more. Its current managing director pointed out that the initial $20M required to start operations could be obtained from the sale of the assets the company still has, while an additional $55M would be investment up until 2018. 

These are interesting developments in a Russian airline market, that continues to suffer from the broader economic crisis. While it is yet to be seen whether Transaero will fly again, its shares went up by 75% in the Moscow stock exchange upon these news being made public.