The Budget Deficit and Sanctions Are Prompting russia to Sell Its Stake in “aeroflot”

The federal agency for state property management of the rf (“rosimushchestvo”) has begun preparations to sell a 23.76% stake in “aeroflot”, announcing a call for bids to select a transaction manager. The future intermediary must assess the market value of the stake and propose a sale mechanism that will ensure maximum proceeds for the federal budget.

Despite official statements about the development of the financial market and the attraction of capital through exchange mechanisms, the deal demonstrates the financial problems of the russian economy. After the sale, the state will retain control over the carrier, but its stake will drop from 73.8% to about 50%.

The situation is complicated by the fact that the stake could be sold at a significant loss to the budget. In 2020, the ministry of finance of the rf purchased these shares using funds from the national wealth fund at $0.84 per share, while the current market value is approximately $0.66. Under these circumstances, the sale of over 944 million shares could result in a loss of about $170 million for russia.

Due to international sanctions, the rf’s airlines are facing a shortage of spare parts, an aging fleet, and rising maintenance costs. This significantly limits the pool of potential investors and reduces the asset’s appeal. According to experts, the main contenders for the stake could be the rf’s state-owned banks, business groups close to the government, or investors from the Middle East and Asia, which indicates moscow’s limited ability to attract broad international capital.