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Source: Airwise

The Russian government will sell its stake in flag carrier Aeroflot
only after the company joins the Air France-led SkyTeam alliance in
late 2005, Aeroflot's head said on Friday.

The government, which controls just over 51 percent of Aeroflot, has
yet to make a final decision on whether to include Aeroflot in its
2005 privatization plan. The formal list is due to be put together
in October, government sources say.

"The reality is clear: there will be no privatization," Aeroflot's
General Director Valery Okulov told reporters after talks with Air
France's boss, Jean-Cyril Spinetta.

"And it's a very good decision because after Aeroflot joins SkyTeam
and modernizes its fleet and Sheremetyevo (airport), the value of
the state stake would be a lot higher."

The economy ministry has long called on the government to sell its
stake in Aeroflot to a strategic investor to facilitate the
company's growth.

But many officials, including Transport Minister Igor Levitin, also
a member of Aeroflot's board of directors, have spoken against swift
privatization.

Okulov met Spinetta in Moscow on Friday to discuss technical details
of Aeroflot's accession to the global alliance, tentatively slated
for late 2005.

"The work that is currently being done will lead to Aeroflot's
joining the SkyTeam alliance. The alliance's nine members are
waiting for this to happen and will embrace Aeroflot with pleasure,"
said Spinetta, speaking alongside Okulov.

The accession is likely to boost Aeroflot's growth and take it a big
step closer to global markets. In return, Aeroflot has to improve
service quality and harmonize its flight systems with that of the
alliance.

SkyTeam, set up in 2000, includes Delta Air Lines and Italy's
Alitalia.

The accession would also expand Aeroflot's global flight network --
the Russian firm currently flies to just over 40 countries against
the alliance's 110 countries.

Development of Moscow's congested Sheremetyevo Airport and
Aeroflot's privatization are closely linked -- officials have said
all questions related to the airport's reconstruction have to be
settled before Aeroflot's stake sale.

Sheremetyevo Airport, Aeroflot and the government all agree that
Russia's biggest airport needs to be upgraded and expanded, but a
long-standing row over how to do so has hindered reconstruction.
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