March 2, 2021

Russian airlines go to the Government to receive subsidies for the coronavirus

The main Russian airlines, such as Aeroflot, S7 or Ural, have come or will go in the next few days to the Russian Government to receive millionaire subsidies to mitigate the impact that the restrictions imposed to stop the spread of the coronavirus have on their industry.

Aeroflot has registered the corresponding application with the Federal Air Transport Agency to be able to access subsidies for the months of February to April.

The S7 airline, which recently became the largest in Russia in terms of passengers transported within the country in April, will do the same with the federal agency next week.

Ural, in turn, expects to receive more than 2 billion rubles (25 million euros or $ 27 million) in subsidies.

On April 15, Russian President Vladimir Putin announced an emergency aid of 23.4 billion rubles (€ 293 million or $ 317 million) to help airlines.

They can spend subsidies on staff salaries (at least 60% of the total), aircraft lease payments (up to 30%), and disbursement for parking (up to 10%), according to the Federal Agency for Air Transport.

Part of it can also be used to cover expenses for operational and maintenance activities.

In addition to state aid, large Russian airlines, as strategically important companies, can apply for credits at a reduced rate with a State guarantee for half the debt.

Putin said last day 13 that internal air traffic has fallen 88% in Russia, while international air has decreased by more than 90%, since the country keeps its borders closed and only allows repatriation flights of trapped Russians abroad.

The President has also promised initial aid of 10.1 billion rubles (€ 126 million or $ 136 million) to support airports.

However, the government’s promised aid to airlines is far less than the losses they will suffer from the pandemic, according to expert estimates.

According to predictions made in mid-March by experts from the Bain & Company consultancy for the RBC media group, the closure of international routes will mean a reduction in revenue for Russian airlines of around 360 billion rubles ($ 4.911 billion) until the end of fall.

This is roughly equivalent to all the international flight revenue of the main Russian airline, Aeroflot, in 2019.


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