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Privatization of Air Moldova: 2000 vs 2018. To find 10 differences!

Privatization of Air Moldova: 2000 vs 2018. To find 10 differences!

InfoMarket agency comments 

The state company Air Moldova went through two privatizations. The first privatization was made in 2000 by the creation of a Moldovan-German joint venture, and it was canceled two years later due to much unresolved questions. The second privatization has now taken place, through the sale of 100% stake of shares; but it also raises lots of questions.

The State Administration of Civil Aviation (GAGA) of Moldova, on behalf of the government of the country, signed a contract with the German company Unistar Ventures in March 2000 on the establishment of a joint venture (JV) based on Air Moldova.

According to the agreement, the government was represented by GAGA to contribute 31.025 million lei (equivalent of 2.548 million euros) in the authorized capital of the joint venture, which corresponded to 51% of shares, and Unistar Ventures should have contributed $2.385 million (equivalent to 29.81 million lei or 2,448 million euros), receiving 49% stake of shares.

Then the general director of GAGA was Victor Topa, who, as follows from numerous publications of recent years (in particular the investigation of Rise Moldova, published on October 5, 2016), was the actual owner of Unistar Ventures.

It is alleged that the general meeting of shareholders of Air Moldova operating with a 51% majority, replaced the general director of the company in June 2002, due to the personal instructions of former President Vladimir Voronin. (Although according to the charter, it was possible to change the general director only by the decision of 75% of the shareholders). Later, the joint venture contract was canceled, and the airline fully returned to state control.

Nobody spoke self-evident truths the joint venture was canceled. Although there were two figures: the company’s profit was $ 0.17 million in 2000, and the first year of the joint venture’s operation in 2001 it was $1 million. The truth is also the lack of transparency in the creation of a joint venture, since there was no competition for finding an investor partner. And after the resignation of Victor Topa from the post of general director of the GAGA in early 2002, the authorities started talking openly that he was related with Unistar Ventures, which, as they say, was the last straw to make the decision of President Vladimir Voronin to return the company to the state property.

The scandal was big and massive. Dresdner Bank has repeatedly expressed its concern about the government’s actions. The fact is that initially Unistar Ventures was represented as a subsidiary of Dresdner Bank.

The conflict situation between the shareholders of the Air Moldova JV was also mentioned in The Wall Street Journal. It was written in the article that the bank’s vice president Ulli Breurer told in an interview at PRO TV channel that Dresdner bank is ready to demand from Moldova immediate payment of two loans in "...$50 million for the state fuel company and $12 million for a pharmaceutical company. Obviously, they meant loans issued by Dresdner bank to the state-owned Tirex Petrol fuel company and the Perfuzon company, under the guarantee of the government in the mid-1990s. The early repayment of loans did not happen, that is, the bank threatened to withdraw loans, but did not withdraw.

The European Bank for Reconstruction and Development considered the possibility of joining Air Moldova shareholders and linked its participation investing in the airline with a presence of the German bank in this project.

However, the agreement to create a joint venture was terminated. This "nationalization" was carried out with so many mistakes that in the decision of the European Court of Human Rights, adopted in December 2008, the Republic of Moldova paid to Unistar Ventures 6.7 million euros, which is the largest monetary compensation in the history of the state.

Air Moldova was included in the list of companies to be privatized six years after the scandal in 2008, but it has never been put up for privatization until the summer of 2018.

On July 30, 2018, the Director General of the Public Property Agency (APP), Vladimir Baldovici, told reporters that Air Moldova’s cumulative losses amounted to 1.2 billion lei and the privatization price was 48 million lei, the budget should have received those amounts. That is, in fact, indicated the value of the sale of the company that followed on October 2, 2018.

What do we know about the new owner of Air Moldova? And what important questions are passed over in silence and remain unanswered?

The Civil Aviation Group SRL Limited Liability Company was created for the privatization of the national air carrier, on August 23, 2018, a month after the announcement of the call for tenders (July 27, 2018) in the Monitorul Oficial. Its shareholders are Blue Air Aviation SA, and two individuals: Andrey Yanovici and Sergey Melnik. Pomers Dzintars has been appointed as the company’s administrator.

InfoMarket agency came up against an interesting coincidence making research of companies owned by these people: Air Jet Company SRL was registered on August 30, 2018 (one week after the registration of Civil Aviation Group ), and the founders were Air Global Group Lip, as well as Andrey Yanovici and Sergey Melnik. Guess who is the administrator of the company? That's right, Pomers Dzintars.

The APP report says that Civil Aviation Group was founded by a group of investors, and the largest share belongs to the well-known international company Blue Air. It really owns some shares, but the amount does not specified …and quite reasonably it’s not indicated, because it is 49%. That is, yes, Blue Air is the largest shareholder of the Civil Aviation Group, but the other two with shares of 25.5% each control this limited liability company, any decisions are made by a simple majority. The authorized capital of Civil Aviation Group is 500 thousand lei (25,2 thousand euros).

Vladimir Baldovici said at the meeting with journalists on July 30 that among the requirements to buy Air Moldova, will be the right to keep the name of the company, its activities and the collective employment agreement with the staff. In addition, the initial investment in the development of the company estimated at 60 million euros.

But, there is not a single word about the requirements in the announcement of the APP: only that the winner of the competition will develop the company, will open 7 new flights until the end of 2019 and 4 flights until the end of 2020, as well as, there are plans to open flights to the USA, Canada and China starting from 2021 (when the airport’s runway is completely reconstructed). It is also planned to increase the number of aircrafts to 14 units, meaning the Airbuses A320 / A319 and Embraer E-190. (Now the company owns 7 of these planes (two Airbuses A320 / A319 and three Embraer E-190). By the way, long-haul flights will require planes much larger than those models, but for some reason other types of planes are not specified, and the goal for transatlantic flights is set.

The only figure published in the press release is an investment of 3.5 million euros for a period up to 2023 (five years) for training and staff development. It is quite logical if new management of the company is going to increase the number of pilots and flight attendants from the current 180 people to 380 people by 2021, according to the APP report.

That means, there are no monetary obligations of 60 million euros, according to the APP report. If they were, the agency would hardly have forgotten to mention about it.

As for the increasing amount of new flights, well, Air Moldova is already engaged in this process from year to year increasing the amount of passengers.

There are two unanswered questions, at least an official response. First of all, why did the airline, which is engaged 44 % of the market in Moldova, has been generated losses in recent years? And, how critical is the debt of 1.2 billion lei (61 million euros) for a company with huge assets?

The company is still functioning after all, so it can easily negotiate with the creditors about repayment schedules with a certain reasonable management.

By the way, let’s refer to the figures. The requests of the Authority of Civil Aviation and Aeroportul International Chisinau granting aid to Air Moldova were discussed at the plenary meeting of Competition Council in 2017. Here the published indicators of the plenary meeting:







Equity (lei)






Profit / (Losses)






Total debts (Lei)






Global debt ratio






General level of solvency







As you can see, the company’s problems began in 2015, maybe the company has been prepared for privatization since 2015?

We were informed that the buyer undertakes to pay the debts of Air Moldova in the amount of 1.2 billion. But most importantly, we were not given a list of creditors, at least large ones, and it was not mentioned when these debts would be repaid. After all, if we are talking about privatization, then all debts should be paid at the time of transfer of ownership rights. Are we mistaken?

There is only one conclusion to be made. Everyone talks about it, but few people write it. The company was brought to bankruptcy (at least put down in black and white) and it was bought cheap for 50 million lei (2.5 million euros) by those who have influence on the decisions of the APP. As for the principal amount - debts of 61 million euros, it is likely that they will be paid from the current activities of the airline, considering Russian air carriers (S7 and Aeroflot) left the Moldavian market, meaning, revenues of Air Moldova will increase.

It’s hard to believe in the honesty and openness of Air Moldova privatization. It would be possible only when the APP, the company or its new owner will publish the list of creditors and the evidence of payments of all debts were made. But, let's be realistic, we can hardly wait for this, as well as the creditors in the nearest future. // 03.10.2018 - InfoMarket. 

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