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bneInfrastructureExecutive Summary:
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| 1. Russian jet crashes Putin's inauguration party |
| Graham Stack in Kyiv |
| May 10, 2012 Vladimir Putin's third term as Russian president got off to the worst possible start on May 10 with confirmation that a Sukhoi Superjet 100 crashed on a marketing flight in Indonesia. The plane has been heralded by the Kremlin as a leading edge in Russian industry's return as a global competitor. Indonesian authorities reported on May 9 that the Sukhoi disappeared from radar screens with 45 people on board, including eight representatives of Sukhoi who were on an Asian tour to promote the new mid-range jet. Wreckage was found on the steep slopes of a volcano in Java the following day. AS bneInfrastructure press went to press there were reports that Indonesia intends to go ahead with buying the SuperJet, despite the crash. While the cause of the accident has still to be ascertained, even pilot error would cast doubts on the quality of the plane, given that Sukhoi's top demonstration flight team was at the controls. Alongside the Sukhoi staff, the plane carried Indonesian businessmen, Russian embassy officials and journalists. The tour, which was launched to try to drum up more orders, started on May 3 and took in Kazakhstan and Pakistan before arriving in Indonesia. It was due to head to Laos and Vietnam next. Indonesia is scheduled to become one of Sukhoi's largest clients for the aircraft, reports AFP. In August, Indonesian regional carrier PT Sky Aviation agreed to buy 12 of the planes, following an order from Kartika airlines for 30 SSJs. Superjets. Deliveries are scheduled to start this year. The crash came on the same day as Russia's Victory Day parade in Moscow, when the country's military might rolls through Moscow to Red Square, and only two days after Putin's inauguration as president for a controversial third term. The Sukhoi Superjet 100 (SSJ) is the flagship of the state-owned United Aircraft Corporation, formed during the president's second term in office in 2004-08. Set up alongside fellow state champion United Shipbuilding Corporation, UAC was the leading edge in a restructuring of Russia's civil and military engineering sectors, which once played a major role in the global trade but fell into deep crisis after the collapse of the Soviet Union. The Kremlin has touted the SSJ as symbolising the return of Russian plane-building to international competitiveness. Significant volumes of state funding went into its development, and Russian state-owned carriers make up the lion's share of the order book for the plane, although it has been punting it to many customers outside the West. Most of the plane's components, especially its electronics, are supplied by leading Western manufacturers, with the engines developed by a French-Russia joint venture. The plane's production has been beset by delays and there are currently only two models in active use in the world, one operated by Aeroflot and the second by the Armenian national carrier. Former Russian president and now Prime Minister Dmitry Medvedev has established a commission to investigate the accident, the government press service reports. In 2011, Medvedev fired the previous head of the UAC, Aleksei Fedorov, under whose aegis most of the SSJ development took place, for "insufficient innovation." In December 2010 he also fired two deputy heads of Russia's space agency Roskosmos following an unsuccessful satellite launch attempt. The Sukhoi superset was designed specifically to avoid two failings of the Soviet civilian aircraft made by Tupolev and Yakovelev design bureaux: high fuel consumption and a terrible safety record. International rating agency Fitch expects a recent crash of Russia's Sukhoi SuperJet-100 aircraft in Indonesia to have a negative impact on the volume of orders for these planes, reads the agency's statement. However, Fitch sees no downward revision of a rating for the aircraft maker Sukhoi Civil Aircraft, which is currently rated at BB with a stable forecast. The government of Russia's constituent republic of Sakha (Yakutia) does not plan to cancel its order for two Sukhoi Superjet 100s following a recent crash, the republic's Deputy Prime Minister Anatoly Skrybykin said, RIA Novosti reported. The plane, Russia's first all-new passenger jet since the end of the Soviet Union, crashed into Mount Salak in Indonesia on May 9 during a demonstration flight with 45 people onboard. Yakutia plans to receive its first Superjet 100 airplane in 2012 with the second slated to be delivered in 2013. |
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| 2. Moscow to Spend $33bn on Subway Expansion |
| RIA Novosti |
| 15 May 2012 The city of Moscow plans to spend over a trillion rubles (some $33bn) by 2020 extending the capital city's subway system, Andrei Bochkaryov, the head of the municipal construction department, said. The total volume of financing has been set at over a trillion rubles, which includes the planning and construction [of the subway system] up to 2020, Bochkaryov said. The Moscow metro, one of the world's largest and most beautiful subway systems, will be extended by 145.5 km (about 90 miles) of rail lines and equipped with 67 new stations, he said. Bochkaryov also said the new stations will be equipped with toilets, a luxury omitted by Soviet construction planners. Currently, the total length of the Moscow metro, opened in 1935, comes to 305.5 km on 12 lines with 185 stations. It is the second-most heavily used rapid transit system in the world after Tokyos subway. |
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| 3. Russia faces pilots shortage |
| bne |
| 11 May 2012 Russia is facing an acute lack of pilots as domestic airlines expand on the back of the burgeoning tourist trade. Academies producing pilots will not graduate anough this year to meet the demand from domestic airlines, industry experts say which will lead to a poaching war, the Moscow Times reports. About 330 new pilots graduated fromRussian flight schools in2011 480 pilots will graduate in2012 but this is still less than the estimated 800 to1,000 pilots required annually over thenext few years, says Oleg Panteleyev, ananalyst atthe industry information agency Aviaport. Sixty-four million people flew onRussian airlines in2011, andthe number ofpassenger flights increased 12.6 percent compared with 2010, RIA-Novosti reported inMarch. Thenumber ofpassengers grew 18 percent inthe first two months of2012 as compared with thesame period last year, according tothe news service. |
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| 4. Rostechnology to sell 2% of Aeroflot |
| UralSib |
| 13 May 2012 Rostechnology plans to sell part of its stake in Aeroflot. According to RBC Daily, Rostechnology, which owns a 3.6% in Aeroflot (AFLT RX Hold), plans to sell a 2% stake. Reportedly, in two months Rostechnology will sign an agreement with investment banks to sell the stock. Share overhang remains. Earlier Sergey Chemezov, the CEO of Rostechnology, said that the company could sell its entire stake in Aeroflot. At the current share price, a 2% stake in Aeroflot is worth $36 mln, which corresponds to roughly 22 days of trading given average turnover. We see an overhang in Aeroflots shares, as Alexander Lebedevs NRC, the largest minority shareholder with 15% in the company, could also exit. On the other hand, managements plan to improve the liquidity of its depositary receipts via treasury shares could enlarge the investor base. Marginally negative for the stock. We expect the overhang in Aeroflot shares to remain and continue to be cautious on the name given the uncertainty of the integration of acquired assets and the regulatory risks related to the withdrawal of fly-over royalties, EU ecology taxes, and pressure on margins from growing competition. Denis Vorchik |
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| 5. Moscow government will create transport hub linking city's airports |
| bne |
| 5 May, 2012 The Moscow government plans to create an air transport hub linking the city's main airports with the center of the city, reads the capital's draft economic policy and development department's strategy through 2025. According to the plan, Vnukovo and Domodedovo airports will be linked to Moscow's historic center, followed later by Sheremetyevo airport. |
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| 6. Managing company for Vanino sea port will be chosen by tender |
| bne |
| 15 May, 2012 The government will chose the managing company of Vanino Commercial Sea Port by tender, Kommersant quoted a source close to the board of directors as saying. The state-controlled port will receive applications until May 21, and may choose the winner before the end of June. The management company will operate until the port's privatization, which will take place in October-November, according to Kommersant's source. |
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| 7. Koltsovo buys 75% in Nizhny Novgorod airport |
| bne |
| 15 May, 2012 Yekaterinburg-based Koltsovo airport acquired a 74.99% stake in Nizhny Novgorod airport, the company said. The company did not specify the amount of the deal. In February, Koltsovo airport won an auction to reconstruct Nizhny Novgorods aviation hub and buy 75% in the airport through an additional share issue. Koltsovo has said that it plans to invest RUB2.7bns in the airports modernization over the next 10 years. |
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| 8. Aeroflot has no plans to buy Belavia, CEO says |
| bne |
| 15 May, 2012 Aeroflot is not considering ownership of Belarus' national airline company Belavia, Aeroflot's CEO Vitaly Savelyev said, Prime reported. "The issue was not considered by Aeroflot, because there are no official requests. We are not discussing anything," Savelyev stated. |
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| 9. Moscow's airports will choose consultant for development strategy |
| bne |
| 12 May, 2012 Moscow's airports Domodedovo, Sheremetyevo, and Vnukovoare expected to choose a consultant to work out a common development strategy, Prime reported citing a source from the Transportation Ministry. The Moscow aviation hub includes Domodedovo, Sheremetyevo, and Vnukovo. "A contract with a consultant is to be concluded within a month," the source said. A management company is to be based on the Aeroports de Paris model - the management company of Paris' airports - as Russia's Transportation Ministry considers it to be the most suitable for Moscow. |
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| 10. Moscow government will increase public programs financing to RUB19bn |
| bne |
| 10 May, 2012 The Moscow government will increase finances allocated to public programs to RUB19.276bn in 2012 as the city plans to expand its limits, according to the Financial Department draft decree. Funds for the city's healthcare program will increase by RUB6.486bn, social support of the citizens by RUB4.906bn, transport system development RUB1.722bn, education RUB1.681bn, Internet infrastructure development RUB1.513bn, urban planning RUB1.578bn, public utilities RUB1.271bn, tourism programs RUB105.761m. The government plans to reduce spending on housing program by RUB700m. |
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| 11. Reform on unification of empty runs tariffs approved by Federal Tariff Service positive for Globaltrans |
| VTB Capital |
| 13 May 2012 News: The Federal Tariff Service has approved the unification of empty run tariffs. According to Kommersant sources, the reform will come into effect from 1 November. Once passed, there will be a single tariff for the use of the railway network by an empty car, regardless of the last cargo transported by it. Our View: This reform has been discussed for several years. It will make the route network more efficient by incentivising operators to pick up more passing cargoes which previously could have had a negative impact on empty run costs. In order to estimate the effect on Globaltrans, we would need to see details about the level at which empty run tariffs are to be unified. The news, however, is positive for the industry overall and in our view will increase the efficiency of fleet use, eliminate railcar deficits and lower railcar prices. We are reiterating our Buy recommendation on Globaltrans. Back to top Elena Sakhnova, |
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| 12. Investments in Moscow's airports development fall 11% in 2011 |
| bne |
| 12 May, 2012 The total volume of investments into the development of Moscow's airports Domodedovo, Sheremetyevo, and Vnukovo reduced 10.7% in 2011 to RUB15.2bn, Prime reported, citing a Transportation Ministry source. The source also said that investments into the development of the capital's airports totaled RUB171.8bn in 2006-2011, including almost RUB40bns directed from the federal budget. |
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| 13. Globaltrans Acquisition Impact |
| Troika Dialog |
| 10 May 2012 Globaltrans at end April announced that it would acquire 100% of Metalloinvesttrans, Metalloinvests captive rail freight operator, for $540 mln. We expect the deal to be completed very soon, and the company should be consolidated into Globaltrans financials from June. We plug this into our model, leaving all other assumptions unchanged. As a result, we raise our EBITDA forecasts by 14% for 2012 to $642 mln and 22% for 2013 to $764 mln. Our revised target price of $27.08 per GDR implies upside of 49% and warrants a BUY recommendation on the stock. Value- accretive deal. The price of the deal implies a 2011 EV/EBITDA of 3.9 and P/E of 6.1, which represents a discount to Globaltrans levels (6.7 and 10.5, respectively, the day before the deal announcement) and global peers. The price per owned railcar is $65,000, which looks fair for an average railcar age of 8.7 years, versus $70,000[1]75,000 for a new one, but implies a discount to Globaltrans valuation. Strong increase in fleet and financials. After the deal is completed and the company receives the last part of the fleet it purchased earlier this year, Globaltrans owned fleet will increase 46% to 58,101 railcars, the share of gondola railcars at 66%. Fleet size is a key driver for operating and financial results, and we forecast strong growth in financials over the next two years. We project 27% EBITDA growth this year and 19% next. At the same time, increased leverage will translate into higher interest expenses, which will cut net income growth to 25% in 2012 and 12% in 2013. Potential synergy effect upside risk. More than just acquiring fleet, Globaltrans is gaining access to cargo flows, and will thus have more room to optimize cargo flows. This could lead to further improvements in operating efficiency of longer runs. At present, we model Metalloinvesttrans on a standalone basis and do not include any potential synergy effect in our valuation. Post-deal 2012E net debt/EBITDA of 2.5. During 2012, Globaltrans invested heavily in fleet expansion, which was mostly financed through debt, as will be the Metalloinvesttrans acquisition. This could push its net debt to circa $1.5 bln, implying a 2012E net debt/EBITDA ratio of 2.5. However, as the investment program for 2012 has already been financed, Globaltrans can easily reduce this ratio to below 2.0 by year end, leaving room for further acquisitions. |
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| 14. Russian prosecutors terminate Domodedovo airport land fraud case |
| bne |
| 12 May, 2012 Russia's Prosecutor General's Office has terminated the criminal case against Leonid Kovalevsky, the former head of the Domodedovo District of the Moscow Region, who was suspected of an unlawful transfer of state-owned land administrated by Domodedovo airport to a foreign company, Kovalevsky's lawyer Ruslan Kozhura said, RAPSI reported. "The investigator told me by phone the case was terminated, but he did not provide a reason for that," Kozhura said adding that it was possible that prosecutors assumed that there were no grounds to initiate the case. |
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| 15. Siberia Airlines RAS net profit rises 76.3% in January-March |
| bne |
| 5 May, 2012 The net profit of Siberia Airlines, as calculated under RAS, jumped 76.3% on the year to RUB45.8m in January-March, the company said. Revenue rose 30.6% to RUB9.77bn, while the gross profit grew 24.2% to RUB1.57bn in January-March. The sales profit increased by 31.38% to RUB621.7m over the period. |
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| 16. Pulkovo's passenger traffic up 19.4% in JanuaryMarch |
| bne |
| 16 May, 2012 The passenger traffic at St. Petersburg's Pulkovo Airport rose 19.4% on the year to 2.7m people in January-March, Northern Capital Gateway, the airport's managing company, reported. Over the period, passenger traffic on international routes and to the CIS countries increased 29.4% on the year to 1.34m people. Domestic routes saw an 11.0% increase to 1.35m people. |
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| 17. Aeroflot Doubles 2011 Net Profit to $491 Mln |
| RIA Novosti |
| 17 May 2012 Russia's flagship airline Aeroflot saw its 2011 IFRS net profit double year on year to $491 million, the company said on Thursday. The net profit was above a consensus forecast of analysts polled by Prime news agency who expected the companys net financial result at $347 million. The net profit growth resulted from the increased volume of operations, the sale of stakes in subsidiary companies and the result of swapping 52.8 percent of the shares of Terminal OJSC for the shares of Moscow Airport Sheremetyevo (MASH), the airline said. The airlines revenues grew by 25 percent to $5.378 billion, beating analysts expectations of $5.294 billion. The companys EBITDA contracted by 11 percent in 2011 year on year to $646 million, below analysts forecasts of $693 million. |
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| 18. Vnukovo's RAS net loss shrinks to RUB315m |
| bne |
| 12 May, 2012 The net loss of Moscow's Vnukovo Airport, as calculated under RAS, narrowed to RUB315.74m in January-March from about RUB758m in the same period in 2011, according to the company's report. Vnukovo's revenue fell 1.5% on the year to RUB600.58m in January-March, while the gross loss decreased 6.5% on the year to RUB524.50m in the same period. |
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| 19. Domodedovo's passenger traffic up 7.6% to 2.042m people in April |
| bne |
| 17 May, 2012 Passenger traffic through Moscows Domodedovo Airport rose 7.6% to 2.042m people in April, the company said. International passenger traffic increased 8.5% to 1.186m people in this period, while domestic traffic rose 6.4% to 856,110 people. |
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| 20. Goldman considers Russia's expenditures on transportation are not enough |
| bne |
| 15 May, 2012 In Russia's infrastructure, roads are the area in greatest need of investment, according to an analysis by Goldman Sachs. Expenditures on transportation from 2005 to 2010 ran at 1.5% to 1.7% of GDP. Spending on infrastructure overall, including electricity and communications, was 3.7% to 4.3% of GDP, say analysts at Goldman Sachs. According to World Bank methodology, Russia is a country with average per capita GDP, and it needs to spend at least 3.5% to 4.5% of that GDP on infrastructure. Expenditures on road construction are growing - from RUB255bn in 2005 to RUB545bn in 2011. But the rate of growth of automobiles is outpacing road building. As a result, 30% of Russian roadways are constantly overloaded. The Transportation Ministry has estimated that traffic jams cost the equivalent of 7% to 9% of GDP. New road-building funds that will be tapped starting this year will help jump-start road construction. Spending will increase to RUB794bn in 2012, RUB942bn in 2013 and RUB1tn in 2014. By 2018 the state will spend about RUB1.8tn, which is nearly 1.1% of forecasted GDP, reads Goldman Sachs' report. More than 70% of this funding will come from motorists via excise taxes on fuel. |
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| 21. Greater Seaport cargo turnover up 3% in JanuaryApril |
| bne |
| 17 May, 2012 The cargo turnover of the Greater Seaport of Saint Petersburg increased 3% on the year to 17.722m tonnes in JanuaryApril, the company reported. The transshipment of oil products fell 16% to 3.145m tonnes, while container transshipments rose 12% to 7.745m tonnes. Mixed cargo transshipments increased 5% to 4.736m tones. |
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| 22. Cargo traffic at Russia's seaports raised 5.3% in January-April |
| bne |
| 12 May, 2012 The cargo traffic of Russia's seaports rose 5.3% to 175.8m tonnes in January-April, the Association of Commercial Sea Ports said. The volume of bulk cargo increased 15.5% to 76.6m tonnes, due to an increase of coal, container cargo, and ferrous metals shipments. The volume of mineral fertilizers traffic fell 14.7% to 3m tonnes, liquid cargo dropped 1.4% to 99.2m tonnes in the reported period. Cargo exports rose by 10.7% to 139.9m tonnes, import cargo traffic fell 12.9% to 12.9m tonnes. |
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| 23. Toll roads may appear in Moscow by 2025 |
| bne |
| 5 May, 2012 A toll may be launched on several of Moscow's highways by 2025, a draft Social Economic Development Strategy for Moscow said. One of the strategy's regulations is "the introduction of smart tariff system for traffic within the city including a step-by-step introduction of fees, differentiated in accordance with the city zones and kinds of diesel and parking fees within the Garden Ring and the Third Ring Road in the first stage, in further stages troughout all areas of agglomeration." Also under the project, the city plans to construct pedestrian areas and streets with special attention to areas of future business centers. |
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| 24. Government will finance 70% of MoscowSt. Petersburg high-speed rail |
| bne |
| 16 May, 2012 The government approved covering the costs of high-speed railroad construction between Moscow and Saint Petersburg to the sum of RUB795bn, or 70% of the total, Director of High-Speed Rail Lines, a unit of Russian Railways, Denis Muratov said, cited by Prime. He also said the government plans to invest a total of RUB260bn in the railroad during the first 10 years of its operation. The remaining 30%, or RUB329.6bn, will be paid by a private investor. |
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| 25. Goldman considers Russia's expenditures on transportation are not enough |
| bne |
| 15 May, 2012 In Russia's infrastructure, roads are the area in greatest need of investment, according to an analysis by Goldman Sachs. Expenditures on transportation from 2005 to 2010 ran at 1.5% to 1.7% of GDP. Spending on infrastructure overall, including electricity and communications, was 3.7% to 4.3% of GDP, say analysts at Goldman Sachs. According to World Bank methodology, Russia is a country with average per capita GDP, and it needs to spend at least 3.5% to 4.5% of that GDP on infrastructure. Expenditures on road construction are growing - from RUB255bn in 2005 to RUB545bn in 2011. But the rate of growth of automobiles is outpacing road building. As a result, 30% of Russian roadways are constantly overloaded. The Transportation Ministry has estimated that traffic jams cost the equivalent of 7% to 9% of GDP. New road-building funds that will be tapped starting this year will help jump-start road construction. Spending will increase to RUB794bn in 2012, RUB942bn in 2013 and RUB1tn in 2014. By 2018 the state will spend about RUB1.8tn, which is nearly 1.1% of forecasted GDP, reads Goldman Sachs' report. More than 70% of this funding will come from motorists via excise taxes on fuel. |
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| 26. First segment of Don Highway launched in test mode |
| bne |
| 15 May, 2012 The first toll segment of the M4, or Don Highway, in the Moscow Region launched in test mode on May 15, a representative of highway operator Russian Highways (Avtodor) Yekaterina Varyonova said, RIA Novosti reported. The highway will be free to use for at least one month, Varyonova said. The fee on the 108 kilometer-long road is planned to be set at RUB1 per kilometer minimum. |
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| 27. Leningradka-MKAD junction may be ready by the end of 2012 |
| bne |
| 14 May, 2012 The first part of a new intersection at the bottleneck where Leningradskoye Shosse and the Moscow Ring Road meet should be open by the end of this year, Vedomosti reported. Mayor Sergei Sobyanin ordered contractors to speed up the pace of work - without compromising on quality - after a tour of the site. The access ramps on the southwest side of the MKAD, in the direction of Rublyovskoye Shosse, should be complete by the end of 2012, while those on the northeast side (toward Dmitrovskoye Shosse) should open in April 2013, the Mayor's press service said. Reconstruction work on Leningradskoye Shosse itself from the junction as far as Sheremetyevo Airport should be complete by the end of 2013. The whole project is estimated to cost RUB5bn ($166m). Other junctions to be reworked in coming years include those with Profsoyuznaya Ulitsa, Varshavskoye Shosse and Kashirskoye Shosse. |
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| 28. Armavia plans to buy Superjet 100 despite crash |
| bne |
| 10 May, 2012 Armenian national air carrier Armavia has no plans to suspend negotiations over the acquisition of the second Sukhoi Superjet 100 following a recent crash of a plane of this type, the airline's press office said. The company said that it has been involved in negotiations over the purchase of a second aircraft for two months, though no exact terms have been provided yet. Armavia also said that the exploitation of the first Sukhoi Superjet 100, which was delivered in April 2011, is well under way. "We have no serious claims, though there are some faults like in any other plane". |
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| 29. Aeroflot is ready to buy Vladivostok Avia stake for $8m |
| bne |
| 17 May, 2012 Aeroflot is ready to buy out minority stakes in the airline Vladivostok Avia for no more than $8m, Shamil Kurmashov, Aeroflot's deputy CEO for finance and investments, said, cited by Prime. "We are holding talks on the buyout of a minority stake in Vladivostok Avia. The maximum price that we are ready to pay is $8m," Kurmashov said, adding that should minority shareholders refuse to sell their stakes at this price they will have to invest in the airline's development equally with Aeroflot. |
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| 30. St. Petersburg sees RUB1.5bn ice-breaker berth built |
| bne |
| 17 May, 2012 The government of St. Petersburg expects a RUB1.5 bn berth for an ice-breaking fleet to be constructed at the citys port, Sergei Pylin, the director of the federal state unitary enterprise Rosmorports branch, said, cited by Prime. The berth complex could be built in the eastern part of the port, Pylin added. The construction is to be funded by the federal budget. RUB100m are to be allocated in 2012, and RUB760m and RUB550m are to be invested in 2013 and 2014, respectively. |
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| 31. New terminal of Donetsk airport commissioned |
| bne |
| 14 May, 2012 A new terminal of municipal enterprise Donetsk international airport was commissioned on May 14, Interfax Ukraine reported. The seven-storey terminal has three main floors. The gross area of the building is 58,000 square meters. The airport building also includes a bus station, a three-level parking area for 605 cars, outdoor parking area for 1,004 cars and bus parking places for 20 buses. During the Euro 2012 in June the terminal will service international flights and from August 1, 2012 the new terminal will service all flights. |
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| 32. EU air passenger transport growth slows in 2010 |
| Eurostat |
| May 14, 2012 In 2010, London/Heathrow remained the EU's busiest passenger airport, with 66 million passengers handled, down by 0.2% compared with 2009. Paris/Charles de Gaulle (58 mn, +0.5%) and Frankfurt/Main (53 mn, +4.1%) were the second and third busiest airports, followed by Madrid/Barajas (50 mn, +3.9%) and Amsterdam/Schiphol (45 mn, +3.7%). Nine of the top 30 airports registered decreases in the number of passengers handled in 2010, with Dublin (-10.1%) showing the largest fall, followed by London/Stansted (-7.0%), Manchester and Athinai (both -5.2%). The largest increases were observed in Kbenhavn/Kastrup (+9.1%), Wien/Schwechat (+8.7%), Milano/Malpensa (+7.9%) and Roma/Fiumicino (+7.6%). London/Heathrow (39 mn) handled the most extra-EU passengers, Amsterdam/Schiphol (25 mn) the most intra- EU passengers and Madrid/Barajas (19 mn) the most national passengers. These figures are published in a report from Eurostat, the statistical office of the European Union, on air transport in the EU27 in 2010. This report also looks in detail at national, intra-EU and extra-EU air transport of passengers and freight, as well as the most important airport pairs within the EU27. Gradual slow down of the growth in the number of air passengers In 2010, nearly 777 million passengers2 were transported by air in the EU27, split into 323 million passengers on intra-EU flights, 291 million on extra-EU flights and 163 million on national flights. Quarterly data show a decrease in air passenger transport in the second quarter of 2010 (-1.3% compared with the second quarter of 2009), due to the Icelandic volcanic eruption. Growth returned in the third quarter of 2010 with passenger number up by 5.8% compared with corresponding period of the previous year. Since then however, there has been a gradual slow down of the growth, air passenger transport increasing by 5.1% in the fourth quarter of 2010 and by 3.5% in the first quarter of 2011. |
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| 33. Poland "98% ready" for Euro 2012, just don't ask about the roads |
| bne |
| May 7, 2012 Despite well-publicised hiccups - particularly concerning the construction of roads - Poland claims it is "98% ready" to host the Euro 2012 football championships that are set to kick off on June 8. Waving aside the frantic effort to finish preparations, Mikolaj Piotrowski, spokesman for PL.2012 - Poland's organizing arm overseeing projects in transport, accommodation and stadiums told AFP: "We're 98 percent ready. On May 15, the formal organisational readiness of Poland will be announced. It means we'll start to act as if the tournament was already underway." Martin Kallen of UEFA backed up his claim. "I don't see that we will not be ready for the tournament," he said. "If it's not 100%, you won't even feel it. I'd say we're now at 98%. It's OK. We're at the same level as at previous tournaments in most cases, or even a little bit ahead," he added. The only major question mark, he claims, is over a stretch of motorway near Warsaw, which is needed to plug a hole on the route from western Europe. However, Poland has seen several problems building the roads it had planned to ferry the thousands expected to visit the country and its four far-flung host cities. Already suffering a long-term reputation for having some of the worst roads in Central Europe, Transport Minister Slawomir Nowak admitted in February that two major arteries will not be ready in time. "It gives me no satisfaction to say that we will most likely not be able to drive through the entire A1 and A4 highway for the Euros, as some stretches won't be ready," he told a news conference. However, there was no mention of the A2 motorway linking Warsaw and Berlin, with construction on one section having ground to a halt last year after Chinese contractor Covec failed to pay Polish subcontractors. The new contractors have been asked to get the road completed to the point at which it can be used under restrictions such as lowered speed limits. |
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| 34. Turkish Airlines close to buying 50% of LOT? |
| Renaissance Capital |
| May 17, 2012 Event: Yesterday (16 May), Today's Zaman reported that Turkish Airlines (THY) is in talks to buy a 50% stake in Poland's LOT, citing Turkish Economy Minister Zafer Caglayan, who was in Warsaw. On 8 May, Bloomberg cited THY's Chairman Hamdi Topcu, who mentioned that the deal could potentially get final approval "in a month". Action: Currently neutral for both TAV and THY, in our view. Rationale: The long-rumoured acquisition of LOT by THY looks to be near to reaching a close. LOT is Poland's state-owned flag carrier, operating 56 aircraft (vs THY's 179) from its Warsaw hub, some 1,400 km from Istanbul. LOT reported a loss from its core activities in both 2010 and 2011, but targets a EUR13mn profit for 2012. The net effect of the deal would depend on the proposed valuation and suggested strategy for LOT, but as THY is the sole remaining bidder and as the Turkish company already has high debt on its books, we do not expect THY to overpay for the asset. We believe the synergies are also limited, given 1) the proximity of LOT's and THY's hubs; 2) the weak economic environment; 3) severe competition on European routes (though PAX yields improved for most carriers in 1Q12) and increasing competition on Middle East and African routes, with Persian Gulf and African carriers boosting capacity; and 4) historically high oil prices Potentially, we could see hub reprofiling, with Warsaw taking the west-to-east traffic from Northern America to the Middle East and Asia, and Istanbul's Ataturk Airport concentrating on PAX transfers to/from Europe. This could partially alleviate the capacity constraints of Ataturk Airport, in our view. |
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| 35. Bulgaria's new unit at Kozloduy NPP to happen in 10 years |
| bne |
| May 15, 2012 The seventh unit at Bulgaria's Kozloduy nuclear power plant will be functional by 2022 or 2023 at the latest, according to Economy and Energy Minister, Delyan Dobrev. In an interview May 14 for bTV, Dobrev said the newly established project company created to manage the building of Unit 7 will bear full financial responsibility. AETs Kozloduy has an initial capital of BGN2m (EUR1m) and is responsible for selecting a site, commissioning an environmental impact assessment, and conducting other procedures related to the construction of the new unit. When the government suspended the Belene nuclear power plant project in March, it was decided that one of the reactors earmarked for it would be used as unit 7 at Kozloduy. Russian state company Atomstroyexport has already produced a 1000 MW reactor for Belene. The construction of the Belene plant would have cost EUR10.35b in the best case scenario, according to the estimates of the Bulgarian government's consultant for the project, HSBC bank. The 2006 contract that the government signed with Atomstroyexport for the construction of Belene was for EUR3.997bn. Subsequently, however, it became clear that the final price would be higher, which led to years of haggling and seeking of "strategic investors" by the Bulgarian government. The cabinet of Prime Minister Boris Borisov terminated the project regardless of Russian compensation claims, arguing that it was "economically unfeasible" for Bulgaria. |
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| 36. Serbia set to build world's largest solar park |
| bne |
| May 9, 2012 Luxembourg-based Securum Equity Partners Europe will invest EUR2bn in Serbia's project to build the world's largest individual solar park, newswires report. A memorandum on the project was signed on May 8 in Belgrade by Serbian Minister of Environment, Mining and Spatial Planning Oliver Dulic and members of the company's management board, Tanjug news agency reports. Dulic said Serbia had no financial commitment in the investment, but expected to collect EUR750m in taxes over the next 20 years. Serbia will lease land for the park free of charge for a period of 25 years. Ivan Matejak of Securum Equity Partners Europe said the solar park's construction could start as early as the beginning of next year, once a final location for the solar park is found. The company chose to build the solar park in Serbia because it receives about 40% more solar radiation than other parts of southeast Europe and it has an industrial tradition with a highly skilled labour force, the official added. The park would have a capacity of 1,000 MWp, over a total area of 3,000 hectares. Some 500-600 jobs are expected to be created once the solar park is finished, while 2500-3000 people will be hired for its construction. The power plant is expected to be ready in 3 to 5 years. Italian MX Group, one of Europe's leading solar panel manufacturers, will work on the project and is expected to move its production to Serbia, along with its subcontractors, which would create an additional 1,000 jobs, Dulic added. Serbian Prime Minister Mirko Cvetkovic, who also attended the signing, said it was important the project was export-oriented, would employ Serbian workers and introduce new technologies, which was why it had the government's support. Securum Equity Partners Europe is part of Securum Equity Partners Group. It deals with consultancy and investments in continental Europe. |
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| 37. HRK2bn Croatian bridge cancelled due to lack of funds |
| bne |
| May 18, 2012 No money is why the Croatian government had to cancel a highly desirable HRK2bn (EUR265m) bridge project, Transportation Minister Sinisa Hajdas Doncic told the cabinet May 17. The bridge, started in 2007, was supposed to connect the southern city of Dubrovnik with the rest of the country via the Peljesac peninsula, eliminating the need to cross the border with Bosnia and Herzegovina, Bloomberg reported. The contract envisaged a time period of 48 months for the completion of construction work, but so far only HRK58m worth of work has been done. In June 2010, the contractors stopped construction work nothing has been done since then, HINA news agency reported. The companies involved in the project, including Konstruktor- Inzenjering, Viadukt and Hidroelektra Niskogradnja, will be refunded for costs incurred so far, Hajdas Doncic said. Prime Minister Zoran Milanovic said the bridge is not unnecessary, but its construction was not planned and funded well enough, adding that he expected his ministers to seriously approach the Neum Corridor project. "The purpose of that project is the same as that of the Peljesac Bridge - to link Peljesac with the mainland in a cheaper and more efficient way, with the consent of our neighbour Bosnia and Herzegovina and of the local community. Our first efforts in that direction show that it seems to be possible," said Milanovic. |
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| 38. Bulgaria-Greece gas link ready by 2015, company CEO says |
| bne |
| May 14, 2012 Bulgaria and Greece plan to complete the construction of a EUR200m pipeline connecting their natural gas grids by 2015, Elio Ruggeri, CEO of IGI Poseidon SA told Bloomberg May 11. Bulgaria imports all of its gas from Russia and wants to diversify supplies. A EUR24m interconnecting pipeline with Romania's grid will be completed in 2013. Similar pipelines with Turkey and Serbia are being developed, according to the the country's Energy Ministry. We are now completing our engineering activities and obtaining permits both in Greece and Bulgaria with the aim of reaching an investment decision by the end of 2012 or beginning 2013, Ruggeri said. This will ensure that the pipeline will be in operation either by the end of 2014 or beginning of 2015. IGI Poseidon SA is a venture between Greeces natural-gas supplier Depa and Edison SpA, which has an agreement with the Bulgarian Energy Holding EAD to develop the pipe. The 180km link will run from Komotini in Greece to Stara Zagora in Bulgaria and will be open to ship gas from the Caspian, the Mediterranean, or from a liquefied natural gas terminal in Turkey, Ruggeri said. Its initial annual carrying capacity will be 3bn to 5bn cubic meters. |
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| 39. STEAG to invest EUR200m in Romanian wind farm project |
| bne |
| May 15, 2012 German electricity producer STEAG has bought the 108 MW Crucea Nord wind farm project from Monsson Group and plans to invest EUR200m into the project, newswires reported May 14. The Crucea Nord project is scheduled to become operational by late 2013 and create 100 jobs, the companies said in a statement. When the farm is complete, it will generate clean electricity for nearly 200,000 households and cut carbon dioxide emissions by over 300,000 tonnes a year. The electricity generated at the Crucea Nord wind farm will be channeled to a new transformation station, which in turn will be linked to the high voltage grid of Transelectrica. The new station will simplify access to the grid for the future wind farms to be created in the area. Romania has pledged to generate 38% of its electricity from renewable energy sources by 2020 as a contribution to limiting carbon dioxide emissions in the EU. The Crucea Nord project will be part of a larger wind power project of a total capacity of at least 600 MW. |
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| 40. CEZ launches 5MW solar plant in Bulgaria |
| bne |
| May 11, 2012 In its first investment in renewable energy in Bulgaria, Czech power company CEZ has opened a 5MW solar energy park in northern Bulgaria, the company said May 10, Reuters reported. CEZ said it plans to invest a total of EUR40m in green energy projects in the country. The new facility is worth EUR10m and is estimated to produce around 5,762 megawatts of green energy annually in the next 15 years, CEZ Bulgaria said in a statement. "Our project is a step towards reaching the goal of the country to have 16% share of renewable energy in total energy consumption by 2020," said Petr Dokladal, regional manager of CEZ in Bulgaria. The company already controls power distribution in western Bulgaria and thermal power plant in the Black Sea city of Varna, |
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| 41. New Romanian PM eyeing nuclear energy |
| bne |
| May 14, 2012 New Romanian Prime Minister Victor Ponta supports the plan to build two more nuclear reactors to boost energy independence. Ponta told Romanian television Pro TV May 13 that he backed the construction even though four of six investors have pulled out. "My view is that we should try to continue this project, while respecting all safety standards of course, especially after the Fukushima catastrophe," Ponta said in the interview. "Romania's energy independence is crucial," he added to explain his support for a project estimated to cost EUR4bn, AFP reported. Romania currently has two reactors in operation at the Cernavoda plant, but plans to build two more have been blocked by the 2010 withdrawal of four investors - Czech group CEZ, GDF Suez of France, the German RWE and Spanish company Iberdrola. In April, then-head of the Economy Ministry's energy department Alexandru Sandulescu said a lack investor interest could see the government go it alone and build just one reactor. At that time, the government had received a bid for the construction contract from a consortium led by Canada's Lavalin. Romania's Economy Ministry had extended the deadline by which companies can bid for the development of reactors 3 and 4 to September 15. Romania's two nuclear plants use Candu-type Canadian technology and produce about 18% of the country's electricity needs. If built, the two new reactors will have an installed power of 720 MW each and will double the power plant's output. While Ponta likes nuclear, the country's new government does plan to seek a moratorium on shale gas drilling, putting on hold plans by US oil company Chevron to tap reserves in eastern and southern Romania. Germany shut down its own nuclear plants following the March 2011 disaster in Fukushima, but Lithuania plans to push ahead with a project to build a reactor with the Japanese group Hitachi by 2020. |
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| 42. Bulgarian Solarpro begins regional expansion in Macedonia |
| bne |
| May 15, 2012 Bulgarian Solarpro Holding signed its first contract for setting up a photovoltaic park in Macedonia, the company announced, Novinite reported May 14. The 1 MW solar park will be built near the southern Macedonian city of Bitola. Solarpro's Macedonian branch will be in charge of engineering, procurement and construction servicing of the project. "The signing of this contract sets the start of the regional expansion of Solarpro Holding. The company's strategy is, after assuming a leadership position in Bulgaria's solar power sector, to target the regional markets, with neighboring countries being the utmost priority," Solarpro said in a statement. Solapro Holding says it has become the largest system integrator of photovoltaic parks in Bulgaria with a total of 32 solar power facilities at different stages of competition, and a total capacity of almost 100 MWp. |
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