Rosavia will take over the business of several bankrupt airlines and will be co-owned by the Moscow city administration and Rostekhnologii, a state corporation purporting to promote high technology.

Rosavia is the airline's definitive name, the mayor, Yury Luzhkov, told reporters. It replaces the company's tentative name of Russian Airlines.

"Rosavia is a serious matter. Recently several companies have gone bust - AiRUnion, KrasAir, Samara and some others. At the request of the government of the Russian Federation, we have taken responsibility for this transportation. And so we have been dealing with this matter since August 8 to this day. It has been possible to stabilize the situation, though not yet completely," Luzhkov said.

Luzhkov, who was speaking after meeting with Deputy Prime Minister Sergei Ivanov, said the city administration had made expenditures to pay for kerosene and "resolve the situation," and that he and Ivanov had discussed the possibility of government compensation for the expenditure. "We got a positive decision," the mayor said.

Luzhkov said Rosavia would take some time to pay back the money put into it. "The new airline will be buying aircraft, there are plans to organize an aviation school and open new routes," he said.

Luzhkov also said the state would partially subsidize the cost of Rosavia tickets for economy class passengers traveling between European Russia and the Russian Far East.

Other issues raised at the meeting between Luzhkov and Ivanov were a leasing proposal, procedures for the payment of taxes for the acquisition of aircraft, and Rosavia's organizational matters, the mayor said.

The Moscow administration will own a 49% and Rostekhnologii a 51% stake in Rosavia, which owes its emergence to a decision made in summer 2008.

(c) 2008 Daily News Bulletin; Moscow - English. Provided by ProQuest LLC. All rights Reserved.

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