Aeroflot’s board of directors has approved the purchase and restructuring of struggling Russian airline Transaero.

The directors met on 3 September where they discussed Transaero’s financial position (the airline’s debts have reached an estimated $1 billion) and the results of an earlier interagency meeting with the government’s first deputy prime minister Igor Shuvalov, who had approved the acquisition.

Having decided ‘that it was necessary to involve Aeroflot Group in the restructuring of Transaero’, the directors instructed Aeroflot management to develop proposals around a number of urgent measures. These include the transfer of operational management of Transaero to Aeroflot, and ensuring corporate control over the bailout procedure.

A tender offer from shareholders of Transaero was considered. This consists of an offer to sell at least 75 per cent plus one share of Transaero within 24 days from the date of the offer at a price of no more than one rouble for the tendered shares.

The board of directors approved a motion to create a working group consisting of members of the committees of the board of directors and the company’s management, to hold negotiations regarding substantial restructuring of Transaero’s debt.

“In the whole time I have served as chairman of the board of Aeroflot this is undoubtedly the most important and significant decision that we have taken, and one that will be of transformational significance for Aeroflot,” Aeroflot’s chairman of the board, Kirill Androsov says.

The Aeroflot Group is 51 per cent owned by the Russian government and is the country’s largest carrier. Transaero is Russia’s second largest airline.