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Bloomberg News

Armenian National Airline Armavia Goes Bankrupt, Grounds Flights


By Sara Khojoyan on March 29, 2013

Armenian businessmen Mikayel Baghdasarov’s Armavia, the country’s only carrier, declared bankruptcy today and will cease flights starting April 1.
The company founded in 1996 was unable to pay debt accumulated to the Zvartnots airport in Yerevan, Armenia’s capital, and to its contractors, Armavia said in an e-mailed statement today. The total debt was less than $50 million, Baghdasarov told the Arminfo news service on March 15.
Europe’s debt crisis has curbed travel and made governments reluctant to prop up airlines amid the region’s deepest cost cuts in a generation. Hungary’s Malev folded in February 2012, while LOT Polish Airlines SA last week said it needs a“painful” cost-cutting program to stay afloat. Aerosvit, Ukraine’s biggest private airline, entered bankruptcy in December.
Armavia’s owners have been diverting funds from other businesses to fund the airline in the past three years, the company said in its statement.
Armavia has 14 aircraft and was the first operator of Sukhoi’s Superjet 100.
To contact the reporter on this story: Sara Khojoyan in Yerevan at skhojoyan@bloomberg.net
To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net