Armavia was once Armenia's national carrier.
Armavia History by HETQ
HETQ's reporter Vahe Sarukhanyan did a six part series in 2015 on the history of Armavia Airlines.
Armavia: An Airline’s History
February 16, 2015
It remains to be seen just how the Armenian company Armavia Airlines, which had been operational for around 10 years, went into bankruptcy. No one knows why that, in 2005, a popular company holding a monopoly in the domestic airlines industry for a decade declared itself bankrupt, especially when it had no obstructions to business.
Hetq has attempted to track the ups and downs of Armavia Airlines from its beginnings to the present day. Company’s Founding
Armavia was officially registered as a company on December 12, 1996. The founders were Yerevan residents Ararat Sargsyan, Hovik Davtyan, Ohan Semirjyan, Isahak Seyranyan and Aviatrans LLC. The company is not found in the electronic registry today. It wasn’t until 2001 when the name of the company officially changed to Armavia Airlines LLC.
The biggest shareholder in the company was Aviatrans, which was registered at 15 Mashtots Street in Yerevan. The company was later dissolved, but today a company called Aviatrans CSC, one of the founders being Isahak Seyranyan, is registered at that same address. This company operates as a travel agency.
It’s not clear what the company was doing when it was founded in 1996. However, in 1999 the company changed its purpose of activity in the electronic registery. With that change came the departutre of Ararat Sargsyan. In October 2001, Hovik Davtyan, Ohan Semirjyan and Isahak Seyranyan relinquished their shares to Mikayel Baghdasarov’s Mika Armenia Trading CSC (Edmond Asiryan was registered as the founder). The company was renamed Armavia Airlines CSC. One month later, Armavia sold its shares to Aviatrans and was registered to Liparit Poghosyan of Yerevan and Slavik Koshtoyan of Mgarshen.
It’s interesting to note that a director wasn’t listed in the electronic registry for the company until 2003. We do know that until 2008 Armavia’s registered legal address was 15 Mashtots and was later changed to Zvartnots Airport.
The First Airliner
Armavia started operating its flights in 2001. The International Air Transport Association (IATA) granted Armavia the U8 airline code and the International Civil Aviation Organization (ICAO) gave the company the RNV code, while the airline’s identifying mark was ARMAVIA. Flights were bound for Russia and Turkey. At the time Armenian Airlines was still operational. According to the aviation registration database, Armavia had one airliner in 2001, the Tu-134A (registration number EK-65575, serial number 62350), which was 22 years old.
This airplane was under lease from the Sochi-based company Chernomor-Avia. The company was founded by the former director of Gyumri Airport Hamlet Koshtoyan, a relative of Slavik Koshtoyan. It’s no coincidence that in 2004 the EK-65575 registration number was given to another company founded by the Koshtoyans called Gyumri Airlines CSC (the mentioned aircraft was the only plane in service by the company).
Siberia Airlines Makes Inroads Into Armavia
In September 2002, Armavia’s ownership was reshuffling. Liparit Poghosyan and Slavik Koshtoyan sold their shares to Natalya Filyova, from Novosibirsk, Russia, who is one of Russia’s wealthiest women today. Both she and her husband Vladislav Filyov are the founders of S7 Group, which includes Siberia (S7) Airlines and Globus Airlines. Filyova became a 50 percent shareholder in Armavia while Mika Armenia Trading owned the other half of the shares.
One month later on October 2, Armavia received its first Airbus A320-211 aircraft (factory number 726), which was fairly new, built only five years prior. The plane was owned by International Lease Finance Corporation (ILFC) and leased to Siberian Airlines, although it was operated by Armavia.
It wasn’t until June 2013 when the aircraft’s lease was transferred to Armavia, registered with the number EK-32007 (this same aircraft was leased to Georgian National Airlines, now Sky Georgia, from January to April in 2005). In the fall of 2005 the aircraft was returned to ILFC.
On March 14, 2003, Siberia Airlines and Armavia signed an investment agreement, as Siberia’s invested shares amounted to 68 percent. In December 2003, Filyova renewed her registered 68 percent in shares under the name AviaFin CSC, of which she was the sole shareholder. At that same time Andrey Nikitin of Novosibirsk was appointed Armavia’s General Director and served until 2005.
In 2003, the second year of its partnership with Siberia Airlines, Armavia acquired two more aircraft, including a second leased Airbus A320-211. It had been operated in Australia and was 12 years old. The airplane was registered with the number EK-32008 in Armenia. According to Planefinder.net, the owner of the aircraft is CIT Leasing Corporation.
Hetq wrote about this plane, named after the composer Aram Khachaturian, in 2013. We have not been able to find information about the fleet of Atlantis European Airways, which was founded by Aram Marutyan, the Deputy Head of the General Department of Civil Aviation (GDCA) at the time.
However, GDCA informed us that one of the aircraft was surprisingly the EK-32008. As the Certificate of Registration posted on the Atlantis European Airways web site shows, on May 29, 2014 the ownership of the plane was transferred to Unibank CJSC and the operator was Atlantis (the certificate expired at the end of the year). According to aviation web sites, for a considerable time the aircraft has been parked at the Prague Airport for Atlantis European Airways.
In December 2003, Armavia registered another airplane, an ATR-42-320, that was leased from the French-Italian company ATR. The plane, which was previously operated by American, Canadian and Algerian carriers, received the registration number EK-42023. Both this plane and another acquired in January of 2004, an ATR-42-300 (EK-42022), were returned very soon to the same owner in April 2004. The ATR-42 (42 signifying the seat count), which was designed for short-haul flights, did not meet the company’s expectations.
Armavia: Controlling the Armenian Skies
In Part One of this series tracing the founding and ultimate dissolution of Armavia Airlines, we wrote that in September 2002 Natalya Filyova (founder of Siberia Airlines) obtained a 50% shareholder of Armavia.
On March 14, 2003, Siberia, Armavia and the government of Armenia initialed three agreements.
According to one of them, the government issued Armavia exclusive permission for air route operations. This was a blow to the state owned Armenian Airlines which faced others problems starting in the late 1990s. Much was talked and written about the fact that the profitable air carrier faced numerous problems during the tenure of Robert Kocharyan, Armenia’s second president. (Kocharyan became president in 1998).
Many believed that the company’s financial and technical problems, operating non-profitable flights, were a result of poor management. Others believed that it was a conspiracy from the top to artificially bankrupt Armenian Airlines in order to make way for the company owned by businessman Mikayel Baghdasarov. The state owned company experienced a financial crisis during 2002-2003 and according to the March 14 agreement the government put the first nail in the coffin of Armenian Airlines by allocating a number of route permits to Armavia, including the most profitable of all – the Yerevan Moscow route. It’s not by accident that in the same year Armenian Airlines cancelled all flights and was declared bankrupt by the RA Economics Court on April 12, 2004.
In the summer of 2004, during an interview with Azatutyun Radio, Armenian Airlines Director Arsen Avetisyan (now the director of Air Armenia) gave several reasons why Armenian Airlines accumulated some US$28 million in debt.
These included the 1998 Russian default, the separation of profitable subunits from Armenian Airlines that same year (e.g. the state owned AviaSnound Company that supplied meals. Another transported cargo within the confines of airports). He also mentioned the joining of the debt ridden Gyumri Airlines with Armenian Airlines as another factor.
Avetisyan said that they had drafted a plan to get the company back on its feet. It would sell off all its assets, except for the Il-86 plane, to pay back a portion of the debts. The plane would be used to fly the Yerevan-Moscow-Yerevan route and the expectation was that in two years all the company’s debts would be paid off. Avetisyan also noted that given the agreement between Armavia and the government, their financial plan to rehabilitate the company would probably be rejected.
Moving ahead, we should note that parallel to the fall of Armenian Airlines, in April 2003, Arsen Avetisyan and Vahan Harutyunyan (brother of justice minister Davit Harutyunyan; 1998-2007), founded Air Armenia, a company that later purchased technical lab equipment from the bankrupt Armenian Airlines. (Such equipment was capable of servicing Soviet-made aircraft).
Armenian Airlines never got back on its feet, Armavia received the opportunity to operate profitable flights, and Siberia Airlines (according to one of those March 14, 2003 agreements) increased its 50% share in Armavia to 68%. The Armenian government also came out a winner. The agreement obligated Armavia to pay US$1 million annually, from January 1, 2004 to 2013, for the exclusive rights. (A total of $10 million)
According to the third agreement, the government transferred certain Armenian Airlines’ property and obligations to Armavia.
On March 27, the government agreed to the transactions and directed Justice Minister Davit Harutyunyan to sign them.
Days earlier, on March 23, the government had initialed a memo of understanding with Armenian International Airways. The parties agreed that a portion of funds from the Armavia transaction would go to paying off the 852 million AMD debt of Armenian Airlines. On May 22, 2003, the government decided to allocate 861 million of the resources going to Armavia to Armenian Airlines – to cover wage debt and 1 billion AMD to pay off budgetary loans.
Even though in 2003 Armavia wasn’t the only Armenian company conducting passenger and cargo flights, the company obtained a number of allowances by signing an agreement with the government. It thus became a national carrier. Generally, national carriers are those companies in which the state owns a majority share of more than 50% (there are exceptions when the state owns a smaller share), or companies issued certain allowances by the state. The “divided” Armenia skies
There were two major players in the Armenian airlines market in 2003 – Armavia and Armenian International Airways (AIA). If the first primarily fly to Russia, the second focused on Europe. AIA received state registration on June 13, 2002. It was founded by the well-known businessmen Versandik and Hrayr Hakobyan, Levon Baghdasaryan, and Gagik Tsarukyan.
The company’s first director was French-Armenian Levon Baghdasaryan, later replaced by Versandik Hakobyan. From 1994-2002, Hakobyan served as the Armenian Airlines rep in the UAE. From 2007 to 2012 he was a Prosperous Armenia Party MP. Gagik Tsarukyan, the wealthy Armenian businessman, also founded AviaSnound CJSC (now defunct).
All this goes to show that in 2003 Armenian passenger aviation was controlled by these prominent oligarchs and, of course, Russian Siberia Airlines.
AIA only had one Airbus 320-212 airplane (registration number EK-32001). Between 2002 and 2005, AIA was operating the plane. During 2005-2006, AIA leased the plane to Pakistani, Tunisian, Lebanese and Arab companies. On May 5, 2006, a fire erupted at one of the hangars at the Brussels airport. Four aircraft were put out of service including Armavia Airbus A320-211 (EK-32010) and AIA EK-32001 which at the time was being operated by Air Arabia (UAE). There were no human deaths. The two Armenian aircraft were destroyed. The flight operations of AIA thus came to a halt. This company, however, still exists today. As of May 2014 it’s been renamed International Airways and Versandik Hakobyan serves as director.
The EK-32001 at Charles de Gaulle Airport, Paris (August 20013)
After 2005, when AIA leased its plane to other companies, Armavia essentially enjoyed monopoly status in the Armenian skies. We should note that we are referring to passenger transport. There were numerous small companies engaged in cargo transport, just like today. A New Brand, New Horizons
As mentioned in the previous article, Natalya Filyova, a 68% shareholder in Armavia at the time, reregistered her shares under the name of Aviafin Ltd., a company which she owned outright. The other 32% was owned by M. Baghdasarov’s Mika Armenia Trading Ltd. In December, Andrei Nikitin (who like Filyova also hails from Novosibirsk) was appointed the General Director of Armavia Airlines. Nikitin managed the company until April 30, 2005, when Bagdasarov’s offshore Mika Limited purchased Aviafin. Thus, Siberia Airlines pulled out of Armavia.
In late 2003 Armavia had four planes – one TU-134A (EK-65575), two Airbus A320-211 (EK-32007 and EK-32008), and one ATR-42-320 (EK-42023). After Armenian Airlines departed from the sector, Armavia began to also operate the presidential TU-134A-3 type aircraft (EK-65072), which, as a presidential airplane was operated until 2007 when it was already 30 years old. In August 2010 this plane was auctioned by a governmental decree. The starting bid was set at 600 million AMD. The buyer was Armavia. Today, the plane is parked at Zvartnots Airport in Yerevan.
As of 2007, Armenia’s president and other officials travel in the 1998 manufactured Airbus A319-132 (EK-RA01; as of 2014 registration number 701). Prior to 2013 this plane was also operated by Armavia and later by Air Armenia. Today it’s operated by the Aviation Educational Center CJSC, a part of Armenia’s General Department of Civil Aviation.
Armenia 701, over Moscow’s Vnukova Airport (Winter 2015)
Let’s us return to 2014. Armavia returned to a company called Chernomor-Avia theTU-134A (EK-65575) aircraft it had leased and operated from 2001. In January 2014, Armavia leased another ATR-42 (EK-42002) which it returned to the ATR company with another plane it has leased in December 2013.
In 2003, Armavia attempted to lease another Airbus A320-211 type plane. (It already had two) It was to be given the EK-32009 number but the deal never went through. In February 2004 the company did succeed in obtaining such a plane produced in 1995. It was registered under the number EK-32009 and was given the name “Mesrop Mashtots”. In June, another Airbus A320-211 (EK-32010) manufactured in 1996 was leased. It was christened the “Grigor Lusavorich”. On May 3, 2006, the “Mesrob Mashtots” crashed into the Black Sea, killing 113. On May 5, 2006, the “Grigor Lusavorich” caught fire in Brussels. No one died.
Thus, by the end of 2004 the company had four leased Airbus A320-211 aircraft ((EK-32007, EK-32008,EK-32009, EK-32010), as well as (according to company General Director Andrei Nikitin) one AN-24, about which there is no information in the data bases. On October 25, 2004, the public was introduced to the new image of Armavia. If airplanes weren’t painted in the past, or if the tails were just blue with the name “ARMAVIA” written, the new design was completely different.
As Alison Coeur, director of the British company Landor Associates which participated in the rebranding of Armavia stated at the time, they tried to represent the culture, colors and symbols of Armenia in the remake. They used the colors of the Armenian flag. The aircraft’s engines were painted orange, blue and red. The plane’s tail displayed apricot flowers painting the symbol of Armenia - Mount Ararat.
2004 was a successful year for the company. In May it became a true member of the International Air Transport Association (IATA); joining 270 other aviation companies. In June it signed up to the MITA (Multilateral Interline Traffic Agreements) and the IATA Clearing House.
In 2003 the company flew 3,026 flights; carrying 249,200 passengers. In 2004, it flew 5,373 flights; carrying 430,900 passengers add 1,500 tons of cargo and mail. As of May 21 Armavia started to fly from Gyumri’s Shirak Airport to Rostov on the Don, Anapa, Minvody and Stavropol. General Director Nikitin said that in 2005 the company wanted to gain a prominent position in the mid-haul routes (transit) from Armenia to Europe, the US, Far East, and also from Siberia and the Far East, via Zvartnots, to the Middle East, Europe and the CIS.
Nikitin also said that it was premature to talk about operating at a profit given that the company had invested heavily in setting up a technical base, in retraining 30 pilots (56,000 Euros per pilot), obtaining new equipment and uniforms, the leasing of two Airbus A320, and costs associated with rebranding the company.
Armavia: With Siberia Out of the Picture, It’s Baghdasarov’s Time
Siberia Distances itself from Armavia
The main event of 2005 was when national carrier Armavia Airlines’ last remaining 68 percent of Siberia Airline’s invested shares were divested.
That happened on April 30, when Mikhail Baghdasarov’s company Mika Ltd. (registered offshore on the island of Jersey) bought all the shares belonging to Aviafin CSC, owned by one of the founders of S7 Group, Natalya Filyova.
It was that company that controlled Armavia’s 68 percent of shares. The remaining 32 percent belonged to Baghdasarov’s Mika Armenia Trading Ltd., which, along with Aviafin, was registered in Yerevan. Thus Baghdasarov became the sole shareholder of Armavia.
In September 2002, Armavia’s ownership was transferred to Natalya Filyova, who became a 50 percent shareholder in the company. In December 2003, Filyova renewed her registered 68 percent in shares under the name AviaFin CSC, of which she was the sole shareholder. This transaction did not violate the Armenian law “On Aviation,” since the law states that a representative of law can obtain the deed of an operator (in this case, Armavia), of which at least 51 percent of shares belongs to Armenian citizensand/or a representative of law registered in Armenia.
In the spring of 2005 that partnership ended. Siberia Airline’s plans for Armenia were revealed in 2002 by the company’s commercial director, Anton Yeryomin.
Continent Siberia reported at the time that in order to import aircraft manufactured in the west, Russian carriers were forced to pay high customs tariffs that comprised up to 46 percent (of which 20 percent was VAT) of the aircraft’s cost. The Russian government only permitted Aeroflot to obtain 27 imported aircraft tariff free. Companies like Siberia were then obliged to purchase aircraft by other means. Nearly all aircraft owned by Siberia was registered offshore in Bermuda and given the national codes VP-B or VQ-B. Armavia’s interests were protected the same way.
“If the government won’t permit the import of aircraft into Russia, then we’ll find other options. The international market is currently offering favorable conditions for leasing aircraft,” Yeryomin was quoted as saying at the time.
Siberia intended to train its staff to operate the western-manufactured aircraft, and then after the roadblocks were cleared it would run domestic flights in Russia also. It wasn’t by coincidence that in 2002-2004 Armavia, or rather Siberia, leased four A320-211 type aircraft, each of which was worth around $30-35 million. Two ATR-42-300 planes were also acquired by the company for only a few months that were intended for short-haul flights from Yerevan to Moscow, Anapa, Sochi, Stavropol, Krasnodar, Simferopol and Odessa. But the planes were deemed unsuitable for flights across mountain ranges and in high temperatures, so they were returned to ATR.
Armavia’s ATR-42 (February 2004)
The first Airbus A320-211(EK-32007) acquired by Siberiawas leased for three years. In October 2002, Baghdasarov said that “The costs of leasing are incurred by Siberia Airlines but this is a highly favorable arrangement because Siberia doesn’t intend to stop with one or two planes. We’re talking 8-10 planes.”
The pilots of these planes, which were being refurbished in France in the summer of 2002, were employed by Siberia, while the cabin crew were Armenian citizens as well as Armavia employees. The Republic of Armenia General Department of Civil Aviation Air Training Centreconducted the cabin crew’s trainings in order to operate the Airbus A319 and Airbus A320.
It remains to be seen how the partnership between Siberia and Armavia will be viewed—positively or negatively. In 2007 Dmitry Atbashyan, President of the National Aeronautical Association (NAA) of Armenia, told Regnum that he was opposed to Siberia’s presence since the lopsided 70-30 percent arrangement between the two companies violated a provision by the International Civil Aviation Organization (ICAO) stipulating that airline regulations must be heeded by a given government to a business owner that is an actual person or else a representative of law. Atbashyan was also disappointed that Siberia did not undertake social responsibility programs despite making good money in Armenia.
“Siberia left behind a few leased airplanes, leased plots, dozens of old, worn out computers and lots of problems,” he said.
But not all that is true. Siberia’s investments put Armavia on its own two feet and thanks to that money Armenia kept its own national carrier in the spring of 2003 when the deal was made with the Armenian government. Former Armavia General Director Andrei Nikitin stated that although Armavia’s shares on the Armenian air transportation market amounted to 5-6 percent at first, by 2004 that figure rose to 43 percent. This reality of course played a role in the bankruptcy of Armenian Airlines and the transfer of its air route operations to the new company. Siberia’s leased planes continued to serve Armavia, although both of them went out of service due to disaster and fire. Trainings for operating the Airbus planes happened abroad, while in Armenia trainings for pilots, instructors, technical staff and cabin crews were carried out and a database and service station were both set up as Nikitin explained. Not only that, the company developed a new brand. The partnership with Siberia was also deemed successful by Artyom Movsesyan, Head of the General Department of the Civil Aviation since 2004.
Later on, many experts and company employees would draw comparisons between Siberia and the Baghdasarov eras, in favor of the former, pointing out poor management during the tenure of the Armenian oligarch that came to the fore in different ways and something that wasn’t even refuted at the top echelons of Armavia (while naturally pointing to the “faults” of others in the company’s failures).
New Flights to Europe and the Middle East
When Armenian Airlines put up its sole Airbus A320-211 for lease to foreign operators in the beginning of 2005, Armavia monopolized Armenia’s skies. By the end of 2004 the company was operating 25 routes, including flights to Paris, Athens, Dubai, Beirut, Saint Petersburg and Kiev.
In June 2005 Armavia acquired an IL-86 type airplane (EK-86118), which was manufactured in 1991 and had been operating in Armenia from the start, mainly by Armenian Airlines on behalf of Air Vani. The plane was given the name “Mika.” That same year in October the gargantuan plane, with the capacity to hold 345 passengers, replaced Armavia’s EK-32007, which was the company’s first-ever Airbus. After a three-year run the plane was returned to International Lease Finance Corporation (ILFC), the aircraft’s owner. The IL-86 was retired in 2008 and now sits in Voronezh, where it was manufactured.
The EK-86118 Taking off from Moscow’s Domodedovo Airport (September 2005)
In 2005, according to Armavia’s web site, the company transported 500,100 passengers—257,100 from Armenia and 243,000 en route to Armenia. In 2004, the total number of passengers that flew was 430,900 and249,200 in 2003.
The company had a busy year in 2006. Two Airbus A319-132 planes (EK-32011 and EK-32012) were added to the Armavia fleet, leased from the US-based CIT Leasing Corporation. Both planes were scheduled to be in service until November 2011. Two Yak-42 planes (EK-42417 and EK-42345) were leased from Dubai Air. The second plane served in the fleet for several months before being transferred to a Russian airline, and the EK-42417 was in service until 2010 and has since been decommissioned, parked in Kazan, Russia.
The most tragic year in Armavia’s history was also 2006. On May 5 at 12:05 am, a fire broke out inhangar number 40 at Brussels Airport. The fire wasn’t extinguished until 3:00 am. As a result the hangar’s roof caved in and four planes were destroyed.
The hangar was leased from the Belgian company Sabena technics, a company that specifically serviced Armavia’s planes. During the years when Siberia Airlines ran Armavia the planes were serviced by Lufthansa. Two of the planes in the hangar on May 5 belonged to Armavia. One of them was the only Armenian International Airways' Airbus A320-211 (EK-32001), which was operated by Air Arabia in 2005-2006. The other Airbus A320 that belonged to Armavia, the EK-32010, was named “Grigor Luysavorich.” A third A320 belonged to the Greek Hellas Jet company but was operated by Volare Airlines of Ukraine. A Belgian Lockheed C-130H Hercules military aircraft was also lost. Fortunately there were no deaths.
One of the last taken photos of the EK-32010 (Athens, March 2006)
The EK-32010 was leased from Wyndermere Park Holdings B.V. of Amsterdam in 2004. The plane was built in October 1996 and was still in very good condition by the time it joined the Armavia fleet—just 7 years old. But it had only been operating for five years. From 1996-2001 it flew under the Ansett Australia banner. The plane ended up in France where it was serviced by TAT (the owner of Sabena technics since 2005), and on May 6, 2004, the plane arrived in Yerevan. Exactly two years later the plane was finally decommissioned.
The remains of the Hellas Jet plane
This incident occurred only two days after the most tragic accident in Armenia’s aviation history, which cast a shadow that still remains.
Armavia: Armenia’s Greatest Aviation Disaster
On May 3, 2006 at 2:13 am local time near Adler Airport, Armavia’s Airbus A320-211 (EK-32009), flight 967 en route to Sochi from Yerevan, crashed into the Black Sea.
All 8 crew members and 105 passengers perished. This event marked the greatest tragedy in Armenia’s aviation history. It was also the first major plane crash in 2006.The crash claimed the 6th most number of lives in the history of the Airbus A320. A few months later the Interstate Aviation Committee announced the reasons for the crash. The department’s official findings, however, did not favor Armenia. Not only that, to this day there are several unofficial theories circulating about what allegedly led to the deaths of 113 people.
This airplane, built in 1995, was Armavia’s third Airbus A320-211. It first served in Ansett Australia’s fleet from 1995 to 2001.
The airline stopped flights in September 2001 and the plane ended up in Bordeaux, France. In 2004 the plane underwent maintenance and refurbishment by the French aerospace company Sogmera and it joined the Armavia air fleet on February 9 of the same year.
Armavia leased the plane from Vermeille International Services B.V., registered in Amsterdam, according to Former Executive Director of Armavia Andrey Nikitin. However, during the plane crash investigation the General Department of Civil Aviation determined that the plane was registered to the company Funnel of George Town, Cayman Islands. The plane was named Mesrop Mashtots.
As we previously reported, in October 25, 2004, under partnership with theBritish company Landor Associates, Armavia revealed its new brand design, which incorporated the colors of the Armenian flag and emblems. The EK-32009 was itself repainted with the new colors in the Netherlands.
Flight 967 from Yerevan to Sochi took off at 1:47 am on May 3 (although set for takeoff at 1:45 am according to the flight board). The arrival at Sochi’s Adler Airport was set for 2:00 am (3:00 am Yerevan time). The flight had 105 passengers, including 6 children, most of whom were Armenians according to the official list. On board 77 passengers were Armenian citizens, 26 were from the Russian Federation, one was from the Ukraine and another was from Georgia. The flight crew comprised 8 members (Captain Grigor Grigoryan, second pilot, Arman Davtyan, flight engineer Nikolai Khacharyan, cabin crew members Mariana Hasratyan, Lusine Gevorgyan, Anaida Abelyan, Rostislav Shelemetev and Armen Haroutunyan.
One of the last images of the EK-32009, taken at Moscow Domodedovo Airport (April 30, 2006)
The flight crew’s first contact with Adler was made at 1:10 am Sochi time, out of radar contact (although it was in Georgian airspace). By 1:17 am the flight crew and the approach controller were discussing the actual ground weather conditions and forecast. The weather was bad, with rain and low visibility. The flight crew decided to turn back to Yerevan since the conditions for landing were lower than favorable. At 1:26 am the crew requested the latest forecast from the controller. Then at 1:30 am, according to the controller, visibility was 3600 meters and thecloud ceilingwas at 170 meters above sea level. At 1:31 am, the crew decided to continue its course towards Sochi based on the received information.
At 2:00 am the crew lost communication with the control tower at Adler Airport. The plane was flying at an elevation of 3600 meters and was visible on radar. The controller instructed the crew to descend to 1800 meters and reported the weather conditions on runway 06, which were above the minimum. Then the flight crew received permission to fly at 600 meters, whereby control of the landing was handed over to the air traffic controller.
At 2:10 the flight crew announced preparation for landing. The air traffic controller stated that the visibility was 4000 meters and the cloud ceiling was at 190 meters, which was acceptable for landing. Thirty seconds later theair traffic controller stated that the cloud ceiling dropped to 100 meters and the air crew was instructed to loop around right for a second landing attempt and fly at 600 meters. The controller instructed the crew to stand by before breaking contact with them. At that moment the plane was flying at an elevation of about 340 meters.
Last contact with the plane was made at 2:12:34 am, after which the crew no longer responded to the air traffic controller. The plane was fixed on radar until 2:13:02 am and then disappeared. Later it was revealed that the plane was only 6 meters above sea level at the time. The plane crashed on the Black Sea near the mouth of the Mzymta River and was destroyed.
Tense Days After the Crash
After the disappearance of the plane on the radar screen the Russian Ministry of Emergency Situations began its rescue mission. At 4:05 am local time rescuers found the remains of the plane and life vests 6 km from the shoreline. Later they found pieces of the fuselage, body parts, cargo and a fuel slick floating on the water surface. Several ships, rescuers and special equipment arrived at the site of the crash. According to the Ministry of Emergency Situations the plane fell at a 60 degree angle. On the same day the Sochi Prosecutor’s Office opened a criminal case for the violation of safety rules and operation of air traffic causing the death of two or more people. Hours later the case was transferred to the Russian Federation Office of the Prosecutor General.
President Robert Kocharyan held an emergency meeting on the morning of May 3 with security agency, law enforcement and aviation officials.
Artyom Movsesyan, the Head of the General Department of Civil Aviation, told reporters that speculation about low fuel being the reason for the crash was unlikely since the plane contained 10 tons of diesel, which was double the amount needed for the Yerevan-Sochi flight.
He confirmed that the plane was in top condition to fly and the pilots were experienced.
Armavia’s owner Mikhail Baghdasarov said on May 4 thatthe Belgian company Sabena technics, which serviced Armavia’s Airbuses, reconditioned the plane in April 2006.
Two days later the company stated that they worked on the plane in Yerevan but never in Brussels. Days later Baghdasarov confessed that the plane’s renovation work was performed in Bucharest and his previous statement was made in error.
On May 3 the Armenian Prosecutor General’s Office launched criminal proceedings for the violation of rail, air or water transport safety and operation rules causing the death of two or more people. After a presidential advisory meeting on May 3, Defense Minister and president of the Armenian-Russian intergovernmental commission Serzh Sargsyan went to Sochi. Special teams and investigation units from the General Department of the Civil Aviation also went. Between May 3 and 4 three special missions from Armenia were organized, including a group of surviving family members of crash victims. May 5 and 6 were declared national days of mourning in Armenia, and May 5th was a day of mourning in Russia as well.
Russian law enforcement officers on May 3 stated that the crash was not a result of a terrorist act. In the days that followed the Armenian Prosecutor General’s Office also denied that an act of terrorism or low fuel resulted in the crash. On May 3 the Armenian insurance company Grand, which insured the passengers, flight crew and plane, announced that the relatives of the victims would receive compensation of $20,000. Company director Artak Andonyan stated that a well-known London-based firmreinsured the company’s risks. Insurance compensation for the plane would be paid only if it was determined that the plane’s operational procedures were not violated. The next day the Armenian government decided that 1.5 million dram (about $3,400) would be allocated to all of the victims’ relatives. The Finance Ministry soon opened a special account for the purposes of making transfers of funds to surviving relatives. Armavia followed suit with a similar account. Days later the Yerevan Municipality decided to allocate 223,500 (about $500) to the victims’ relatives and offered psychological counseling to the families. The Russian Federation allocated 100,000 rubles to the families of the 26 passengers who were Russian citizens, while the Sochi Municipality distributed 500,000 rubles to the relatives of those victims who resided in the city. Another 250,000 rubles was allocated by the Krasnodar region to the families of victims carrying Russian passports.
On May 5 the relatives of victims approached the site of the crash in two vessels and laid wreaths and flowers on the sea’s surface. A memorial service was performed in the Adler Armenian church. That same day, Baghdasarov announced that the plane’s captain performed exemplarily but could not comment on the controller. He went on to claim that as the plane made its second loop around, the aircraft wasn’t simply landing but had essentially landed.
“The runway was only 200 meters away and the controller picked them up and sent them around again, at the moment when he had no right to order them to do so. He could have only made a recommendation,” Baghdasarov said, adding that it did not mean the controller was at fault.
Although parts of the plane and human remains were on the sea’s surface, most of it was found at deep levels, between 500-600 meters according to the Russian Ministry of Emergency Situations. The results of the search and rescue missions were 51 bodies found, 47 of which were identified by May 7. Over 750 people were involved in the search and rescue, including more than 50 technicians. The Interstate Aviation Committee (IAC), which is based in Moscow, performed the technical investigation of the crash. Rostransnadzor, RosAviatsia, Rosaeronavigatsia and representatives from Armenia and France also participated in the investigation. France, which is where Airbus planes are designed and manufactured, sent representatives from its BEA (Bureau d'Enquêtes et d'Analyses pour la sécurité de l'aviation civile). Together with the Russians they were involved in the recovery of the “black boxes,” which was significantly delayed due to bad weather and the sludge at the bottom of the sea. On May 16 the “Navigator” ship was dispatched carrying the RT-1000 underwater apparatus, which could lift items weighing up to 12 kilograms (the black boxes weighed 7 kilos). Since black boxes are designed to function for 30 days, technicians were racing against the clock to retrieve them. They were found 496 meters below sea surface, five meters apart from each other. Finally 19 days later, on May 22, the cockpit voice recorder box was retrieved. Two days later the flight data recorder was found and the search mission concluded.
The Joint Aviation Committee’s Official Version of the Events
On June 8 in Moscow the analysis of the cockpit voice recording was concluded. The Joint Aviation Committee stated that the device’s recording was 33 minutes long. The cabin crew conversed mostly in Armenian. Analysis of the flight data ended on June 17. Two days later the Committee stated that the flight data contained information from eight flights (between April 30 and May 3), totaling 26 hours and 29 minutes in length. The data from May 3rd was from a time period lasting 1 hour and 26 minutes.
Based on the data analysis the Committee concluded that:
-The plane did not explode in mid-air. -The plane’s engines were functioning up until impact. -The amount of fuel was adequate for the plane to reach its intended destination. -In the last moments of the flight the autopilot function was turned off.
From July 3 to 6the Committee met with Armenian, Russian and French experts at the offices of Airbus in Toulouse, France and simulated the EK-32009’s flight based on the collected data using a flight simulator in order to understand what went wrong on May 3.
On July 26, 2006 the Committee announced: “The fatal crash of the Armavia A-320 EK-32009 was a CFIT accident that happened due to collision with the water while carrying-out a climbing maneuver after an aborted approach to Sochi airport at night with weather conditions below the established minimum for runway 06.
While performing the climb with the autopilot disengaged, the Captain, being in a psycho-emotional stress condition, made nose down control inputs due to the loss of pitch and roll awareness. This started the abnormal situation.
Subsequently the Captain's inputs in the pitch channel were insufficient to prevent development of the abnormal situation into the catastrophic one.
Along with the inadequate control inputs of the Captain, the contributing factors to development of the abnormal situation into the catastrophic one were also the lack of necessary monitoring of the aircraft descent parameters (pitch attitude, altitude, vertical speed) by the co-pilot and the absence of proper reaction by the crew to the EGPWS warning.”
Bagdasarov was quick to disagree with the Committee’s findings. He put blame on the ground crew, weather conditions and even the position of Adler Airport. He did not rule out the possibility of appealing the Committee’s decision.
In Armenia no one, from ordinary Armenian citizens to the top leadership, accepted that the pilots were at fault. There was speculation that the decision was potentially politically motivated, so that the airport, services and dispatcher especially would not receive punishment. Armavia’s committee deemed the Committee’s decision to be “not correct” and “premature.” Company spokesman Mihran Khachatryan stated that the experts in Toulouse signed a protocol which stipulated that “The real reason for the plane’s descent, where it collided with the surface of the water, has not been established,” and whatever contained in the decision “was shocking to the airline” and listed “inadequate operations performed by the captain.”
FACT: Forty-year-old Captain Grigor Grigoryan was an experienced pilot. He worked for Armavia for less than two years. He previously piloted An-2 and YAK-40 aircraft. From September 1, 2005 he began flying as a captain of an Airbus A320 (until that point, as second pilot). Grigoryan flew a total of 5458 recorded hours, of which 1436 were on the Airbus A320 (and 566 as captain). The second pilot, 29-year-old Arman Davtyan, worked at Armavia for four years. He flew as second pilot on Tu-154 and ATR-42 aircraft. He became an A320 second pilot on October 11, 2004. Davtyan flew a total of 2185 recorded hours, of which 1022 were on the Airbus A320.
After the Armenian reaction to the decision, on July 27 the Joint Aviation Committee reiterated that the investigations by the Russian, Armenian and French experts were conducted per international norms and political pressure was not and could not have been applied. The Committee stressed that the purpose of the investigation was not to place blame on someone or to determine responsibility (although the decision was written in that manner). It also stated the relevant prosecution bodies in Russia and Armenia would be responsible for determining responsibility. It further stressed that Adler Airport and its armaments completely fell in line with accepted norms and international standards.
Another hypothesis for the reason of the crash circulated in Armenia, namely that gunshots were heard in the airplane. Accordingly, a dispute arose in Zvartnots Airport between two criminal gangs, which continued on board the plane.
“Four relatives of the victims who were Russian citizens claim that they received phone calls from them while on the plane a few minutes before the crash and said that shots were being fired. Not only that, two discharged firearms were found in the water,” said former pilot for Armenian Airlines Vladimir Boghosyan. He added that there were “very important people” on the plane who pressured the cabin crew to land. He also claimed that the National Assembly did not form a temporary crash investigation committee as a result of “pressure from various powers.”
The Russian news service Regnum claimed it received information from an unidentified source that a group flying in Business Class was close to the pilot cabin and a “shooter” who was on his way to Sochi for a meeting was very drunk. According to the source, when the individual learned that the crew was about to return to Yerevan due to the bad weather conditions, he pulled the crew from the cabin and forced them to start landing the plane, which led to a stressful disagreement with the controller.
Among the passengers of Flight 967 were former Interior Minister Housik Haroutunyan, Aram Petrosyan, who was the son of former NSA Director of Armenia Carlos Petrosyan, the former head of Civil Aviation Vyacheslav Yaralov and criminal figure Beniamin Khachatryan (Beno Rostovsky).
The Interstate Aviation Committee stated on October 25, 2006 that the flight recorder did not record explosions and shootings. Both the Civil Aviation of Armenia and Armavia also denied the rumors. The cabin crew’s decision to return to Yerevan was made at 1:17 am, but after learning of the changing weather conditions at Adler at 1:31, they decided to continue on to Sochi. Later, the Interstate Aviation Committee would reveal their findings of the conversation held in the cockpit.
Other points came to light in the Committee’s report.
The Captain did not undergo training required for the passing the Upgrade to Captain Program since it was not included in the Armenian Civil Aviation’s A320 Flight Crew Training Manual. Armavia’s Flight Operations Department did not analyze operations with the required proper flight recorders. The flight crew was also apparently fatigued as the conversation recorded by the voice recorder revealed although they had rested at home for 24 hours. The approach control at Sochi conveyed inaccurate information regarding the weather forecast and visibility to the crew. The weather observer told the controller at Sochi that the cloud ceiling was at 100 m, well below the minimum height of 170 m. The report stated that “the final controller instructed the crew: ‘Abort descent, clouds at 100 meters (300 ft), right-hand turn, climb to 600 meters (2,000 ft)’, instructions not compliant with regulations. However, the controller had a right to order the go-around.”
Several other technical issues related to the flight were described in detail in the Interstate Aviation Committee’s “Final Report on the Investigation into the Accident Involving the Armavia A320 near Sochi Airport on 3 May 2006,” which is accessible online.
In April 2007, the Prosecutor General's Office, per Article 35 of the Criminal Procedure Code (criminal proceedings may not be initiated, criminal proceedings cannot be undergone, and current proceedings must be dismissed when the individual is deceased), closed the initiated criminal proceedings of the events of May 3, 2006.
Armavia: Falling from Grace
The plane crash and hanger fire that both took place within days of each other in March 2006 were heavy blows to Armavia. A total of 113 people perished and two Airbus A320 planes, which did not belong to the company, were lost. The disasters also affected the number of passengers, which decreased to 450,000 in 2006 from 500,000 in 2005.
By the end of 2006 Armavia had two Airbus A319 planes, one Airbus A320, one IL-86 and one Yak-42. The A319s and the Yak-42 were acquired that same year.
Partnership with Sukhoi
In 2007 Mika Limited, registered in the Jersey Islands, became the third shareholder in the company’s management, following AviaFin and Mika Branding. That same year did not see many changes to the air fleet. One more Yak-42 (EK-42362) was added, which the following year was already back in Russia. In the spring a Boeing 737-300 was acquired from Georgian Airways (4L-TGL), which flew under the Armavia name until the summer of 2009.
In 2007 Armavia saw a 21% increase in passengers from the previous year, transporting 572,300 travelers. According to that year’s data the company ran 70 regular flights per week to 10 countries with 22 destinations.
The main event in 2007, however, was the signed partnership with Sukhoi Civil Aircraft on September 14. The contract was signed by Mikhail Baghdasarov and the president of the Russian company’s Board of Directors Mikhail Poghosyan. Soon thereafter, Armenia was scheduled to receive two Sukhoi Superjet 100 aircraft, which were still under development and would be the first to be operated by an airliner. The first plane was to be delivered by December 2008 while the second would follow within the coming six months. Armavia would have the right per the contract to receive two additional aircraft by 2012. To acquire the planes Armavia took out a loan from VTB Bank valued at between US$50-60 million. That deal would later become a headache for all the parties involved.
In 2008 Armavia’s shareholders were reshuffled. Mika Armenia Trading LLC was removed from Armavia’s list of shareholders in January, replaced by Mika Corporation CJSC the following month. Mika Corporation was the successor to Mika Armenia Trading according to the company’s web site, which is no longer online.It was in the wholesale and retail oil trading business, while operating a chain of gasoline stations since 2000. Mika Corporation was once the top fuel reseller, which Hetq previously reported.
Norair Belluyan, Armenia’s Executive Director since 2005, said in the spring of 2008 that a new Airbus A320 was on its way from Toulouse, France. US-based CIT was the leasing company of the brand-new plane (registered as EK-32005), which was named Hovhannes Ayvazovski. After the plane’s arrival Belluyan said that the plane’s lease was negotiated for December 2006 to July 2007. The plane operated until June 2011 after which it returned to France.
Belluyan admitted that a result of the tragic events of March 1, 2008, the company saw a 50 % decrease in passengers in just one month, especially from Europe. Despite the setback, by year’s end Armavia transported 647,000 passengers according to the company’s estimates.
In 2008, Armavia added new flights to Marseilles, Astrakhan, Dusseldorf and Riga. Belluyan stated that after the 2008 Beijing Olympic Games flights to China would start (flights actually began in 2010). A Yerevan-Los Angeles flight was also in the works. Unprofitable flights were slated to stop, including the Minsk route and the third weekly flight to Dubai.
Also in that same year Belluyan began active negotiations with Airbus and Boeing for obtaining a suitable airplane for non-stop flights to Los Angeles from Yerevan. The companies, however, were willing to sell but not lease a plane. Belluyan then confirmed that the company had bought two CRJ aircraft in London and that the company would start only purchasing planes because the company’s “stewardship was improving.” The press would later report that an Airbus A380 and a Boeing 777 were being considered for the Los Angeles flight. Envisioned flights to Tokyo, Bangkok and Canada were never realized.
In 2007 Armavia announced that the French-Belgian company Sabena Technics would be servicing and refurbishing Armavia’s aircraft, including those manufactured by both Airbus and Boeing.
In 2008 Armavia obtained a Yak-42D plane (EK-42447), which it leased from Tatarstan Air. However, it only served the fleet until 2009, when it returned to Kazan. The plane has since been decommissioned.
Armavia Updates Its Air Fleet
The year 2009 proved fruitful for Armavia as it sought to update its aircraft. The first plane it obtained that year was an Airbus A319-111 (EK-32007), not to be confused with the Airbus A320-211, which also was registered under the same number and served Armenia from 2002-2005. In March a plane similar to the EK-32005 flew to Armenia straight from the factory. The plane, which was named after Viktor Hambardzumyan, was leased from the US-company ILFC and was operational until February 2012.
By summer 2009 Armavia added flights to Berlin, Zurich, Rome, Batumi, Kharkiv, Vladikavkaz and, a bit later, Bahrain. At the time the company operated 250 flights to the CIS and Europe. Thirty flights were bound for the Middle East.
In August 2009 Armavia leased its first-ever Canadair CRJ 200LR (EK-20073) from Georgian Airlines. The plane could hold 50 passengers for regional flights and fly a distance of up to 3700 km. But by that December the plane returned to Georgia. That September the company obtained its very own CRJ 200LR built in 2000, which had served in Lufthansa’s fleet for local flights. The plane was painted with the company’s colors in Amsterdam and arrived in Yerevan on September 28. It wasregistered as EK-20014 and named the Sergey Mergelyan. Baghdasarov claimed that the plane would decrease the price of tickets and also keep company costs low. It would fly to Minvodi, Stavropol, Voronezh and even to Zurich, Rome and Athens. The CRJ 200LR consumed 1.1 tonnes of fuel an hour versus 2.2 tonnes by an Airbus. After Armavia’s bankruptcy the plane was parked at Zvartnots Airport, where it still remains.
In August 2009 Armavia signed a memorandum with SuperJet International ensuring that in November of the same year as part of the SuperCare program the Sukhoi Superjet 100 planes would be maintained during a period of five years. The program was designed to reduce administrative, operation and maintenance costs for those aircraft.
In December 2009the airline obtained its fifth and last Yak-42D (EK-42470). It was the only Yak to receive the company’s branding and colors and was named the Alexander Mantashev. The plane was likewise fated to remain parked at Zvartnots beginning in spring 2013 after the company’s demise.
According to Armavia’s statistics the company transported more than 700,000 passengers in 2009.
Tough Year for Baghdasarov
In March 2010 Armavia’s flights to Tel Aviv began. Flights to New Dehli started a month later and so did a flight to Barcelona that June. The Yerevan-Birmingham route started in September. And in October Armavia began its first Yerevan-Almaty-Beijing flight, which lasted 10 hours. By year’s end Baghdasarov announced his intentions to start a route to Amritsar, India. A former employee would later criticize the moves to start such flights citing no economic justification. The Tel Aviv route was a bad move for instance since an Armenian embassy doesn’t exist there, and passengers en route to the city would fly from Tbilisi since tickets were cheaper. The flight to Zurich was empty and the need for the Birmingham route was perplexing since the flow of tourists between that city and Yerevan was very small.
Armavia obtained only one airplane in 2010, an Airbus A320-214 (EK-32006), on the eve of the 65th anniversary of the victory of World War II. For the occasion the plane was named after Hovhannes Baghramyan. The plane’s debut flight for the airline was Victory Day, May 9. It was leased from CIT and operated in Armenia until October 2011. Armavia was the last airline that the plane served—it has since been scrapped.
At the end of 2010, Baghdasarov admitted that it had been a tough year for the company. The number of passengers flown by his estimation was between 730,000 and 740,000, which he considered to be a lower number than previous years when taking into account the over rise in the number of passengers visiting Armenia.
“Moreover, things are getting more expensive—airport services, plane fuel and other services,” Baghdasarov said in an interview at the time.“But I think that the slowdown in the increase in passengers is related to the second wave of the economic crisis, which is inhibiting growth in the economy worldwide. So this was a tough year for Armavia and it wasn’t the best. But I think the situation is only temporary and we’re planning on big investments, obtaining new planes, starting new routes and so forth. I have hopes that those steps will yield resultsnext year.
“We’re also planning to start offering low-cost air tickets. Many say that they’ve flown to this or that country cheaply. I think we need to tap into the ‘very cheap’ option of flying if there’s a demand for it. Perhaps by March we’ll be able to offer such an option.”
Despite Baghdasarov’s estimate, in actuality Armavia flew over 800,000 passengers in 2010 (see the infograph above for number of passengers from 2003 to 2010). The discrepancy is incomprehensible—either Baghdasarov was needlessly disappointed or the company’s figure was inflated. Armavia was also among Armenia’s top 1,000 taxpaying institutions—whereas in 2009 it ranked 174th with 376.156 million AMD in taxes paid. In 2010 it placed 87th with 840,082 million AMD in paid taxes.
Dark clouds would soon be flying over Armavia’s flying colors.
Armavia: Beginning of the End for Armenia’s National Carrier
2011 was a year full of developments for Armavia, Armenia’s national carrier. In January, the first flight to Slovakia’s capital Bratislava occurred. During the year, flights were added to Amritsar (India), Munich, Venice, Lyon and Madrid.
The Odyssey of Sukhoi Superjet 100 in Armenia
The Sukhoi Superjet 100 finally arrived in Armenia on April 19, after a long wait. Armavia and the Russian company Sukhoi Civil Airlines (SCA) had reached a deal on September 14, 2007 for obtaining such airplanes. It was planned to receive the first airplane in Nov-Dec 2008 and a second in the next six months. Armavia also had the right to obtain two more such planes until 2012. Production and tests of the Sukhoi Superjet 100 dragged out, but Armavia finally received the plane, becoming the first in the world to fly it. The first flight, with 90 passengers, left from Yerevan’s Zvartnots Airport headed to Moscow’s Sheremetevo Airport.
Armavia’s new SSJ 100-95B was finished on November 4, 2010. It was designed to carry 98 persons and travel a maximum distance of 3,048 kilometers. (The SSJ 100 class of aircraft currently has two types of planes – the SSJ 100-95B and the SSJ 100-95LR) With it, Armavia started to fly to Russia, Ukraine, Eastern and Western Europe and the Middle East. The airplane was registered as EK-95015 (MSN 95007) in Armenia and was christened the Yuri Gagarin, in honor of the first man to travel to space On April 12, 1961.
Jumping ahead a bit, let’s see what happened to the plane later on. Disagreements broke out between Armavia and SCA Ltd. in 23012. Let’s point out that the EK-95015 flew more than 760 flights (1,870 hours in the air) between April 21, 2011 and April 20, 2012. All told, the plane transported more than 48,000 passengers more than 1.4 million kilometers. According to flight service crew chief Sergei Kharatyan, “The plane justified our expectations. It is liked by passengers. Our pilots, boarding crews and engineers had no trouble in operating it. We believe that the SSJ 100 has a great future.”
Days later, on May 9, during an exhibition flight in Indonesia, SCA’s SSJ 100-95B (the same plane as Armavia’s) collided into a mountain, resulting in 45 fatalities. There were no survivors. Months later, an investigation concluded that the accident was the result of crew mistakes. This tragedy and reports of minor disorders in domestic Russian flights negatively impacted the reputation of the SSJ 100 in Russia and elsewhere.
On June 4, the EK-95015 was sent back to Russia to be warehoused at an airport right outside Moscow. Armavia was inclined to refuse the airplane and stated so in August. Prior to this, it became known that Armavia had rejected the purchase of a second SSJ 100.
The second SSJ 100 (EK-95016) named after the actor Frunzik (Mher) Mkrtchyan had already been painted with Armavia’s colors. It was never delivered. (Novosibirsk, July 21, 2012)
Mikhail Baghdasarov noted that the refusal reason wasn’t Russian debts, as was talked about, but the fact that the airplane didn’t meet stated standards. “Armavia has no desire to take that airplane back [EK-95015-VS] because it’s not financially profitable. Accepted practice throughout the world is that the first airplane is worked on. In this case, the airplane is just built and needs more serious work. Armavia, as a small private company, cannot assume such improvement expenses,” stated Armavia’s PR department. SCA, in turn, said that Armavia still owed it US$4 million in lease fees for the first plane but that it couldn’t get it back because it had been placed as collateral with an Armenian bank.
As we have written, to lease Russian manufactured planes Armavia had entered into a loan agreement with VTB Bank. Press reports stated that VTB had lent Armavia $50-60 million to lease the two planes.
In response to the Russians, Baghdasarov noted that he owed nothing. “The plane was worth $20 million [the lease-VS]. We immediately paid $16 million. That left $4 million but we returned the plane later. Thus we owe nothing for the refurbishing. They believe we should pay another $1 million to get the plane out of collateral.” SCA stressed that if Armavia rejects the plane and wants to return it, then it must remove it from collateral at the bank which would cost $1 million. The Armenian monopolist stressed that if SCA had a buyer it would have long ago removed it from collateral. Contrary to the prior glowing statements of Armavia and SCA, the businessman complained about the frequent breakdowns of EK-95015 and claimed financial losses as a result.
In June, after the EK-95015 had been sent to Russia and after several months of long-range arguments, the sides finally reached an agreement. Armavia would lease the plane for six months. It entered into service in Oct. 2012. But the Armenian side was again dissatisfied with its technical state and two weeks later, on Oct 15, the plane was sent back to Moscow; this time for good.
In May 2013, the Yuri Gagarin was painted with the colors of the Russian Moskovya airlines, but it was never put into operation. It remained parked at Zhukovsky. On the other hand, in that same month the Frunzik Mkrtchyan was renamed in honor of Soviet cosmonaut Yuri Sheffer (RA-89021) and started to fly for Moskovya (now Red Wings). VTB’s legal suits against Armavia rejected
In July 2010, VTB-Armenia lent Armavia $1.8 million at 9.71%. The company was to pay off the loan by July 2012. In 2011, the bank gave up its creditor rights to its Russian parent Bank VTB. In October 2010, VTB-Armenia allocated an $8 million loan, in portions, to Armavia at 9.75%. In both loans, Mikhail Baghdasarov and Mika Corporation stood as guarantors. According to the Russian newspaper Izvestia, Armavia took out a loan with VTB in order to refinance a loan it had taken at ArdshininvestBank to lease airplanes. That’s to say, Armavia obtained the “SSJ 100” through loans from these two banks.
Of interest is that in October 2010, Baghdasarov’s offshore Mika Limited took at $2 million loan at 9.75% from VTB-Armenia whose guarantor was Armavia. The loan was to be paid off by April 2012. However, Izvestia wrote that the loan was for $8 million. A Russian attorney told the newspaper that VTB had a good chance of winning against Armavia in court but that the same couldn’t be said in the case of the offshore Mika Ltd. since it would be very costly to send its representatives to court in the Jersey Islands and that the process could be delayed due to the absence of the defendant.
In February 2013, when the loan payment deadlines had arrived, Bank VTB and VTB-Armenia filed three legal suits against Armavia with the courts in Armenia. Two dealt with loans received by Armavia and the third dealt with Mika Ltd. While the suits were being reviewed in court, in July 2013 an agreement was signed between Armavia/Baghdasarov/Mika Corporation and Mika Ltd., on the one hand, and VTB-Armenia, on the other, regarding the sale-purchase of shares. Accordingly, Baghdarsarov’s team sold (allocated) shares to the bank in lieu of Armavia’s and Mika Limited’s obligations. Taking this into account, the three suits were rejected in 2014.
Unprecedented updating of fleet
In 2011, Armavia added six planes to its fleet all at once. This was unprecedented for the airline. We have already covered the addition of the SSJ 100 in April.
On May 6, the airlines obtained its second Canadair CRJ 200LR type plane that had been operated by Lufthansa CityLine. This new 50-seater was registered in Armenia as EK-20017 and was christened the Martiros Saryan. The plan was to use the plane for flights to CIS countries and Europe. In Dec.2013, after Armavia quit the airlines market, the plane was sold and is still operated by Afghan Jet International Airlines.
(In September 2009, the Armenian carrier had obtained another CRJ 200LR that was named the Sergey Mergelyan (EK-20014). Mergelyan was famous Soviet-Armenian scientist.)
In July, Mikhail Baghdasarov stated that it was more conducive to purchase planes through loans rather than leasing. He said that the demand for flights in the world had decreased and thus there were more planes than needed to transport passengers. As a result, the purchase price for planes had dropped but leasing costs had remained the same. The businessman argued that the company’s increasing loan portfolio wouldn’t have a negative impact; just the opposite. “We believe that it’s better to pay off loans than leasing planes because you don’t get the plane back after paying for the leasing it.” This was the logic behind the purchase of the CRJ’s and the Boeing’s in 2011. When asked about the possibility of bankruptcy, Baghdasarov replied that no such risk existed but that the press was out to malign the company by circulating such rumors. One year later, Baghdasarov would state that he was certain that the demand that Zvartnots implement a 25% discount to Armavia wasn’t enough and that he would declare the company bankrupt and would sell it. Below, we will see that making such contradictory statements was commonplace for Armavia.
The second CRJ 200LR arrived in Armenia on August 1. This plane too had the same operators as the previous one – German, Armenian and Afghani. It was given the name Arno Babajanyan (famous composer) in Armenia and registered as EK-20018. In Dec.2013, like the Martiros Saryan, it too was given to Afghan Jet International Airlines. Other than these two former Armavia planes, Afghan Airlines has no other craft.
At the end of 2011, three Boeing 737-500 were added to the Armavia fleet.
In September, Armavia obtained the first that had been operated by Czech Airlines. It was registered EK-73771. (From 2007-2009, the only plane operated by the Armenia carrier had been a leased Boeing 737-300. It remained registered with the Georgian 4L-TGL and was later returned to Georgian Airways.)
But very quickly, on Sept. 20, the EK-73771 was leased to Slovakian Airlines. The lease wasn’t accidental. Baghdasarov was the co-founder of the new company. His partner was the local businessman Arnold Medzihradsky. Of note is that in January 2011, the first Armavia Yerevan-Bratislava flight took off. It can be said that Baghdasarov planned to link Europe and Armenia via Slovakia. Before arriving in Bratislava, the plane’s Czech Airlines colors were changed to that of Slovakian Airlines in the English town of Norwich. This was the company’s only plane that had to wait for permission to fly regular flights. But the Armenian-Slovakian cooperation failed and the plane never took off. Later, Baghdasarov stated that, “It failed because it demanded huge investments that are currently not possible.” It’s interesting as to what the two sides were thinking before starting the initiative.
In December, the plane was returned to Armavia but was never painted with the colors of the Armenian company, The Slovakian Airlines mark was merely covered with white paint. The paint faded in time and the original lettering reappeared in ugly fashion. The plane was taken out of service and has been parked ever since Armavia went out of business.
The second Boeing 737-500 arrived in Yerevan from Prague in Nov. 2011. Like the previous one, this had only flown under the colors of Czech Airlines. In Armenia, it was registered as EK-73775 and was christened the Hovhannes Ayvazovsky by Armavia.
Armavia operated the plane until the spring of 2013 when the company stopped doing business. The plane was later picked up by Taron-Avia, a company which Hetq has written about. And, despite the fact that according to aerotransport.org that this company is the owner of the plane currently, Taron-Avia chief Garnik Papikyan told Hetq that the company owns no planes. It cannot be ruled out the owner is Papikyan’s Ala International; a company registered in Sharjah engaged in organizing plane leasing and charter flights.
In Dec. 2011, Armavia obtained its last Boeing and its last airplane. The third Boeing 737-500 from Czech Airlines was given the registration EK-73772. Like the EK-73371, it was never painted with Armavia’s colors. Later, along with EK-73775, it too passed to Taron-Avia. It now sits in Amman’s airport. Garnik Papikyan, Taron-Avia’s founder, told Hetq that the two noted planes and a Boeing EK-73797 once operated by Air Armenia, have been painted with the company’s colors and that they will only be brought to Armenia if he receives operating permission.
EK-73772 over the skies of Venice (June 23, 2012)
The fact that the two Boeing’s that arrived in Armenia in December were never given the Armavia colors seems to imply that there were problems. Given that such work isn’t done in Armenia, the planes had to be taken overseas. (200 liters of paint are needed for one “Boeing 737”). Armavia never shelled out the money or time to paint the planes. After the fall of Armavia, Baghdasarov stated that 2007-2010 were years of growth and that the downward slide began in 2011 and ended in 2013. It’s interesting to note that regarding 2010 Baghdasarov said that, “This was a hard year for Armavia or put another way, it wasn’t the best.”
Of note are the periodic contradictory statements of Baghdasarov and Armavia. Above, we noted the praise, and later complaints, heaped on the Sukhoi Superjet 100, and statements regarding the on and off bankruptcy of the company. Regarding 2010, Baghdasarov also said that while the company carried 700,000 passengers in 2009, instead of the expected number of 900,000, the company would only carry 730,000-740,000 passengers. Later, however, Armavia declared that it had transported more than 800,000 passengers in 2010.
Financial problems, debt, delayed flights
Nevertheless, if we are to believe the company’s data, 2011 wasn’t a good year for the company; at least financially. While Armavia was listed as the 174th largest taxpayer in Armenia (376.156 million AMD) in 2009, it rose to 87th place in 2010 (840 million AMD). In 2011, Armavia dropped to 514th place (148.546 million AMD).
In 2011, Armavia owed the Armenian government $1 million. According to the March 14, 2003 agreement (between Siberia, Armavia and the RA government), Armenia received the flight rights to several routes and thus became Armenia’s national carrier. This agreement sounded the death knoll for Armenian Airlines. For such special rights, Armavia was obligated to pay $5 million in 2003 and $1 million annually for the next ten years – for a grand total of $15 million. Armavia also had to grant discounts or free service to those with disabilities and vets of the Great Patriotic War and relatives, for which the government would pay. More correctly, these amounts would be deducted from the company’s profit tax. However during the financial crisis years of 2008-2009, Armavia was freed from paying profit tax and had no profit in 2010 and 2011. This is official information that was used as a basis for the government’s Oct. 4, 2012 decision. We should note that according to Armenia’s State Revenue Commission, Armavia paid 803 million AMD in direct taxes (profit, income) in 2010 and 125 million in 2011.
From 2006-2011 Armavia provided 355.6 million AMD in services to the disabled and war vets. Given that the company was obligated to pay the government $1 million annually (equal to 385.7 million AMD at the time), in the fall of 2012 the government decided to compensate the company only 30 million and offset the rest.
Armavia started having problems with Zvartnots Airport, its main terminal, as early as 2010.
On Sept. 16, 2010, Zvartnots stopped servicing the company’s flights due to the debt it owed. Soon afterwards, the airport’s PR division stated that “in the interest of passengers” those services would be reinstated but could be stopped again given the debt issue hadn’t been resolved.
In response, Armavia delayed its flights for one hour, declaring that Zvartnots charges three times more for its services than any Moscow airport and twice as much as European ones. Armenia International Airlines Ltd. the concession manager at Zvartnots, replied that it was servicing Armavia at a discount.
As of March 2011, Armavia owed Moscow’s Vnukovo Airport 70 million rubles.
Later we will see that Armenian and Russian aviation companies, and others, servicing Armavia had constant problems with Armavia.
Armavia: Armenia’s Faded Colors
The start of 2012 wasn’t promising for Armavia, even though the company had hopes to the contrary. The press had been writing up staff cuts in the company. Norayr Belluyan, the company’s newly appointed president, declared that it didn’t make sense to keep 1,000 employed on the payroll during the crisis if the same work could be done by 500. He added that the staff had been cut by 20%.
As of January 2012, Armavia had a staff of 380. Belluyan also refuted reports about the sale of Armavia. Belluyan had served as the chief executive of the company since 2005, after leaving Russian shareholder Siberia. In December 2011, he became the president, a position that had been filled by owner Mikhail Baghdasarov. Belluyan was replaced by Armen Aznavouryan.
“I can’t do all the work by myself. I’m not made of iron. This is why it was decided to share the responsibilities. Now, as president, I am mostly dealing with external matters. This was done solely to raise the effectiveness of the company,” Belluyan said.
According to the president, Armavia transported 700,000 passengers in 2011, the same number as in 2009. In 2008, that number was 800,000. Belluyan expressed the hope that 8-9% growth would be registered in 2012. As regarding debts, Belluyan said debt was normal for an aviation company. “All aviation companies in the world fly with debt. Those debts are paid off later on,” he said. But Armavia’s debts immediately impacted passengers since flights were being delayed. Armavia – Armenia: Deepening Confrontation
On March 6, Russia Aviation declared that air navigation services were being halted to Armavia flights in Russia, given that Armavia had racked up US$178,000 in debt since December 2011. Armavia said nothing on the matter. Instead, it stated that it was launching an open ended work stoppage due to the high prices being charged by Zvartnots Airport and demanding that airport rates be reviewed. Armenia International Airports CJSC, the airport’s concession manager, declared such a move baseless and a false gambit, noting that it had applied discounted rates to Armavia. Flights recommenced only when the company Russia Aviation guaranteed debt repayment as of March 20.
Armavia’s position was known since the spring of 2011 when owner Mikhail Baghdasarov complained about Zvartnots policy. He noted that the airport charged the same rates to those only flying four flights per month and that Armavia was flying 950 per month. “Parking our planes in overseas airports is cheaper than in Zvartnots. We are forced to receive numerous services abroad, particularly purchasing fuel.” Baghdasarov claimed that he was paying Zvartnots $4-8 million monthly for services. In response, Armenia International Airports (AIA) said the rates had been set in 2005 and hadn’t changed since. On the other hand, according to AIA, the airport obtained aviation fuel from Mika Limited (a company belonging to Armavia’s owner), and that the sale price was set in accordance to a formula devised by Armenia’s State Commission for Economic Protection. (Mika Corporation CJSC deals with the import/export of fuel in Armenia) AIA claimed it paid for fuel on the same day when delivered.
A Hetq source, who used to work for Armavia, said that Baghdasarov wound up paying $200 more for every ton of fuel that he imported to Armenia and then purchased from Zvartnots. The market price for a ton of fuel went up and down based on world prices, flying season, and specific airport. The source said that if, for example, a ton of fuel cost between $1,300 and 1,600 last year, the average price in the first six months of this year was $400 - $500 but $1,050 - $1,200 at Zvartnots. Thus, airlines arriving in Yerevan didn’t fill their planes that often. If a middle haul flight needs 7-8 tons of fuel, companies only filled up at Zvartnots to the tune of 10-20 tons. Companies preferred to fill up at cheaper airports. Hetq’s source added that if the accepted international standard is the fuel accounts for 30% of an airplane ticket, it was 30-40% for Armavia given that the company was forced to fill up more frequently at Zvartnots – its home base of operations – or, rather than importing cargo, it transported aviation fuel to use. On the other hand, according to the same source, each take off/landing at Zvartnots costs 700 Euros and Armavia used this airport the most.
In 2011, while talking about a negotiated resolution of these issues, Baghdasarov said that he had been negotiating with Zvartnots management for the past four years unsuccessfully. “Airport management feels itself strong enough to pressure us,” he said.
Nevertheless, Armavia and AIA started negotiations on March 12, 2012. Government reps also participated. Armavia was demanding a 25 year discount on all service rates. Prior to this, Baghdasarov had said that if their demands weren’t met the company would declare bankruptcy. He also noted that due to Armavia’s situation he wouldn’t be able to finically support any candidate in the upcoming National; Assembly election and that his support would merely be moral. This seemed like blackmail on the part of Baghdasarov, given his close ties to the ruling Republican Party.
Negotiations lasted until Match 15. On the same day AIA General Manager Marcello Vende announced that they had accepted Armavia’s suggestions and signed an agreement obligating them to stick to a timetable to resolve the problem. Accordingly, they were to employ the rates demanded by Armavia. (Baghdasarov claimed not for all services) AIA Deputy Director Andranik Shkhyan noted was six months in arrears totaling $5.3 million. He said that a timetable specifying September as the deadline for payment had been devised. In case the timetable was violated, the new agreement wouldn’t operate. Armavia also promised to present a new business strategy to the airport.
Bulletin: On the basis of the December 17, 2001 contract between Argentine-Armenian businessman Eduardo Eurnekian’s Corporacion America company and the government of Armenia, Armenia International Airports CJSC has assumed management of Zvartnots Airport for thirty years as of June 2002. Management of Gyumri’s Shirak Airport was added to the contract in 2007.A new passenger complex was launched at Zvartnots in the fall of 2011.
Disagreements between the airline and airport continued in the fall. Zvartnots, claiming that Armavia had violated the payment timetable, periodically stopped servicing the Armenian carrier. Armavia noted that payment was made and it wasn’t at fault. Today, Zvartnots is the largest creditor of Armavia – AIA ranks 125th on the list of the companies 172 creditors. The debt owed amounts to 10.6 million AMD, more than $40,000, and about 3.6 million Euros.
Armavia also racked up debt to the Zvartnots weather station. Armavia’s debt to this state agency amounted to 48 million AMD in 2011 and 93 million in 2012. Each weather report costs airlines 33,000 AMD per flight and Armavia was charged 25,000. But Armavia wanted to be charged that amount for the day. The problem was that Armavia could get the station’s weather details on an open system that all airlines use. The weather station, according to employees, owed 17 million AMD to the airport in 2012.
Reorganization and Possible Sale
In June 2012 Mika Corporation CJSC was removed from the list of Armavia shareholders. Two owners remained – Aviafin Ltd. registered in Yerevan (65%) and Mika Ltd, registered in the Jersey Islands (35%). Aviafin was wholly owned by Mika Ltd.
In the summer, the local and Russian media wrote that businessman Haroutyun Pamboukyan wanted to purchase Armavia for $55 million with his Moscow partners. This news spread quickly but Pamboukyan’s partner Khachik Manoukyan (Maks Concern) immediately refuted the news. The next report about a sale came in the fall and Baghdasarov confirmed it. A list of possible buyers included Mikayel Minasyan (Armenian president’s son-in-law), airport manager Eduardo Eurnekian, and businessman Gagik Tsaroukyan. Armavia’s owner announced that no Russian investors were in the list of candidates. Armavia spokesperson said that the company was partially being sold. While Baghdasarov wanted to wrap up the transaction in 2-3 weeks, no one was found to share the heavy debt burden of the company.
The End Finally Comes
On March 29, 2013, Armavia issued a statement that it would be halting all flights as of April 1, given that continuing to operate was impossible. “In the present situation it is impossible to operate further. Thus, we have decided to halt flights and begin the bankruptcy process. We thank all our passengers over the past twelve years and wish them success,” read the statement.
As of April 1, Armavia owed its employees, the Armenian government (some 7 billion AMD according to the company, of which 5.4 million was air tax, for a total of 17.3 billion AMD, including penalties), creditors and service providers huge amounts of debt. At the end of April, Armavia had 40 pilots, 50 on board staff, 70 technicians, 98 other specialists, and some 400 in financial and management sectors.
Armavia’s fleet as of April 1, 2013 consisted of 3 Boeing 737-500’s (EK-73771, EK-73772, EK-73775), 3 Canadair CRJ 200LR’s (EK-20014, EK-20017, EK-20018), 1 Airbus A320-211 (EK-32008), 1 YAK-42D (EK-42470), 1 Tu-134Ա-3 (former presidential plane, EK-65072).
Foreign carriers quickly rushed in to fill the void led by Armavia. Some carriers raised their ticket prices; especially Aeroflot. State Commission for Economic Protection Chairman Artak Shaboyan announced that companies raising prices for no good reason would be punished. The fall of the Armenian carrier gave rise to various speculations in the press. One rumor was that Baghdasarov was pulling out of doing business in Armenia.
Oil Assets are Sold; Cement Factory Also on Verge of Bankruptcy
That rumor later was proven correct. Mika Corporation, according to the press, sold its oil assets (gas stations and offices) to Rosneft.
For a long time the press had also focused on the possible sale of Mika Cement in Hrazdan owned by Baghdasarov. The once great cement plant had racked up large debt and wasn’t able to be sold. The press wrote that the plant was placed as collateral at VTB Bank for a $20milion loan and that the bank was paying employee wages. Later the press wrote that the plant would be purchased by Moscow-based friends of former Deputy Defense Minister Gagik Melkonyan. The sale never went through. Recently, on August 28 of this year, the Kotayk Administrative Court accepted a suit filed by PPF banka to declare Hrazdan-Cement Ltd. bankrupt.
Armavia’s 'Return to Solvency' Plan
On April 25, not long after the March 29 announcement regarding the bankruptcy process, Armavia presented a document (Minimum Primary Conditions to Restore Functioning to Armavia) to the Public Council. The press was quick to call this the recovery to health plan, despite the fact that in the case of a bankrupt company the recovery to health plan is something else as per the law.
Armavia commercial director Levon Karamyan said that the Public Council had requested a document from him listing the conditions under which the company could restore functionality and that it had done so. In other words, this was a document suggesting various steps that the government could take to prevent the case ending up in bankruptcy court.
Thus, Armavia proposed that the pre-2009 parity be restored whereby Armavia and foreign carriers had the right to fly equal numbers of seats, which was later changed from the number of seats to flights. This went against the interest of Armavia given the larger planes of the foreign carriers. It was proposed that the state tax of 10,000 AMD be removed from the price of tickets; that weather station data not be regarded as a separate service but be included in the air navigation service price; to apply a 30% discount in the airport, contrary to foreign carriers; to permit Armavia to obtain its own fuel and to pay Zvartnots only for storing and filling it. Armavia was ready to sell off 74% of outstanding shares. 24.1% was to go to paying off government debt and 49.95 to investors. The rest of the sales income would pay of other debt.
The Public Council proposed to the government to draft corresponding steps to have local carriers. The Council also emphasized the importance of creating equal competition conditions for local companies. On the other hand, the Council deemed the stage by stage liberalization of the sector option vital (American experts were already working on this strategy). The Council said that tendencies in international aviation made such a strategy all the more necessary.
Days before, on April 12, the deadline of the 2003 agreement between Armavia and the government had come due. According to that agreement, Baghdasarov’s company had paid $15 million to become the sector monopolist for ten years. In other words, either the agreement were to be renewed (highly unlikely given the created conditions), or the Armenian airspace was to be allocated to aviation companies fulfilling the demands of the legislation on the books.
Mikhail Baghdasarov gave an interesting interview at the end of May. “I do not believe that a national carrier is very necessary. All that is needed is a good carrier, national or otherwise. Aviation is needed for the security of the country, for the development of tourism and the economy. There must be rules for aviation that shouldn’t change. Those rules must be acceptable for all. Here, those rules change constantly. We are against monopolies. We do not need it. We have spoken about this often but to no avail and losses have been great. One must pay millions of dollars for that monopoly, but no one can say what that monopoly is. A monopoly is when all are prevented from operating flights, but now, all are permitted to. No one needs such a monopoly. This is fiction,” stated Baghdasarov, who hadn’t voiced such a complaint in over ten years.
The government did not meet the demands of Armavia. By the spring of 2013 the government was already developing a new approach to Armenian aviation approved of at the highest levels. At the instruction of the president of the National Competitiveness Foundation, a contract was signed with the American company McKinsey. Their experts crafted a liberalization policy for Armenian air carriers that was approved by the government on June 6, 2013. On October 23 the government adopted the Open Skies program that was tasked with insuring the competitive and stable provision of air carrier services. Hetq has covered the difficulties in implementing such a policy, the concerns of experts and the overall situation.
A former Armavia employee verified to us that the company’s financial situation was getting quite bad. The employee said that Baghdasarov really wanted to get out of the domestic aviation market and that this was the primary reason why the company ceased to operate. Also having not a small impact was the slapdash work ethic of lower management. The employee claimed that oftentimes planes flew with a more than normal payload, which was visible to experts following flights on a specially installed internet system. Allegedly, a part of the payloads was never registered on official documents. Our source said that the transport of such undisclosed loads made money for certain individuals. The Sukhoi Superjet 100 also resulted I huge losses to Armavia since, according to the expert, it flew one day and was parked several days later due to technical problems. Hetq has already written about the inconvenience of certain of the newly opened flights, in particular, to Tel Aviv, Zurich, Birmingham. Also, the company’s plan to enter the market of Slovakia crashed given that the details hadn’t been worked out.
Due to the debts owed by Mika Corporation CJSC (owned by Armavia and Baghdasarov) to the Armenian government, the Mika Stadium reverted to the state in September 2014. The stadium was listed at 9 billion AMD at auction but there were no takers. As we have written, the state takeover of the stadium was fraught with violations. Armavia’s state debt, however, never decreased by this amount.
On October 6, 2014, Armavia was declared bankrupt by the Malatia-Sebastia Administrative Court. The suit was filed by Mika Limited. Creditors of Armavia had previously been listed as 153 and now became 172. New creditors cropped up later. UniBank CJSC was the largest creditor at US$6.6 million, followed by Armenian Development Bank (680 million AMD), AmeriaBank $1.2 million) and Armenian Business Bank ($10.4 million and 17,835 Euros). (These amounts were insured). Other creditors included Kharabakh Telecom (1.6 million AMD), Electric Networks of Armenia (792,000 AMD), Ural Airlines (43,214 Euros), Aeroflot-Russian Airlines (740,000 AMD and $90,147) Mika Corporation (28 million AMD and $792,014) and Mika Limited ($38.378 million).
In Lieu of an Ending
Starting it meteoric ascent in 2001, Armavia was able to capture the Armenian market in 2002 due to investments by the Russian Siberia company and by the agreement, one can say monopolistic, with the Armenian government. Despite certain negative measures, in two years the Russian investors seriously assisted the new airline and fostered the development –financially, technically and in terms of personnel – of Armenian passenger aviation. The ascent of Armavia started with its collaboration with Siberia and continued afterwards, even more so, since there was no alternate carrier post 2005. The Sochi air disaster was a great blow to the company both economically and in terms of personnel. However, Armavia was able to persevere and improve its numbers yearly. If, in 2003, the company transported some 250,000 passengers, that number grew to 800,000 by 2010. Even in the Siberia era, the new brand made Armavia known to the world.
The baseless cutting of flights, the use of airplanes problematic for specific flights and for our region, the failed policy, due to haphazard research, to capture new markets, the inattention of primary staff regarding decision making, and constant contradictions with domestic and external partners, general inadequate management, led not only to millions of dollars of debt assumed by Armavia but to Baghdasarov shutting down the company.
Armavia, regarded as Armenia’s flying colors, could have continue to operate. However artificial its dominancy over the ruins of Armenian Airlines may appear, the liberalization of the aviation sector – with all its negative consequences - was equally natural. In the history of Armenian aviation, the ten years between 2003 and 2013 will perhaps go down as the Armavia decade, rich with the extreme ups and downs particular to the aviation of independent Armenia.