Tweet
WE ARE TRAINING PEOPLE WITH MODERN WAYS OF THINKING AND WORKING
Artur Yernjakyan
ArmInfo
2010-08-24 10:36:00
Interview with President of Mika Limited Holding Mikhail Bagdasarov
Mr.Bagdasarov, a few days ago our agency reported that EL AL (Israel),
UTair (Russia), Aerosvit (Ukraine) and Armavia (Armenia) have signed
a declaration of intention to create an international air union - WE
(Western-Eastern). Why are you going to create such a union?
Yes, we are actually negotiating this possibility but this is just
a possibility yet.
Today, the situation on the air market is so hard that some
companies are going bankrupt or merging so as to survive. One can't
stand competition alone. The fact that Armavia has been noticed and
invited to join such a union proves that our company has quite a good
reputation and quite an effective policy. Armavia may become a highly
reputed company.
As far as I understand, this project is about cooperation rather
merger.
Yes, it will be based on cooperation. There are lots of such unions.
We have been offered cooperation and are about to accept the offer.
The main thing about such unions is the opportunity to help each other,
to create a joint system of maintenance and flight management.
This union may as well involve American or European companies.
2009 was a crisis year for aviation. How did the crisis affect your
company's work?
In 2009 we had no decline in passenger operations. There was certain
decline in early 2010. While the crisis led to bankruptcy of many
companies and closing of flight, we are trying to extend geography of
our flights and to fill a free niche in the market. We started flying
to Barselona, Zurich and India. It still brings losses to us, though
on the other hand, we have enhanced our position in Europe (8-9 flights
against 4 flights in the past), and hope for extra benefits in future.
Could you give specific figures on passenger traffic. Did you make
profit last year?
In 2009 as compared with 2008 our passenger traffic increased by 14%
to more than 700 thsd passengers.
Five years ago when Armavia was created, the traffic volume was 400
thsd passengers. Our company has all the chances to increase its
passenger traffic up to 800 thsd passengers by the end of 2010 thanks
to opening of the new flights and increasing frequency of flights.
The crisis has not ended yet and continues affecting passengers which
have started flying seldom because of the financial problems. Armavia
has a big circulation and small profit 1-2%. It is hardly possible for
any other company of Armenia to function with such a profit, he thinks.
This is a very hard business. For this reason, many companies go
bankrupt. But we hope to develop further.
It was reported earlier that in late 2009-early 2010 Armavia was
supposed to receive two Sukhoi Superjet 100s?
Both liners recently left Yerevan where they had been tested. They
flew to Gyumri and Yerevan.
Their performance was excellent for our severe climatic and geographic
conditions. Because of heat and highland many planes are forced to take
less passengers on board, for instance 125-130 instead of supposed 150,
but there is no such problem in case of the Sukhoi liner.
We are planning to start flying on the liners in December 2010. The
second liner will be delivered in March-May 2011. The place for
Armavia is ready and is undergoing certification.
Recently, the Government of Armenia decided to put up for auction the
former presidential plane Tu-134. Are you interested in acquiring it?
We are not interested because that plane is economically unsound. It
consumes too big volumes of kerosene, its service is expensive and
flights by such planes are banned in the USA and Europe. This plane
is geared to yesterday.
Investors from Africa, Iran or Latin America may buy the plane for
they do not care for the quality of flights. The fact that the plane
can fly is enough for them to buy it.
Let's switch from aviation to cement. I would like you to tell me about
Mika Cement. Its last financial report says that in 2009 that company
experienced a slump in the profit - 125 times lower than a year before.
The global crisis has curbed construction. Today, there is almost
no private construction in Armenia, almost all ongoing projects are
sponsored by the state.
You planned to produce 200,000 tons of cement in 2009. Did you do it?
No, we failed. Today, we are facing high production costs. We are
forced to use new equipment so that to automatize the plant, where
prime cost growth thanks to growth of tariffs for gas and thanks
to hand work, which will turn into the automate one in future. We
have no other way to survive. We thought that hand work will give an
opportunity to people to earn money, but now we see that the plant
may simply shut down and in that case everybody will lose job. The
leadership of the plant never axes. Thanks to automatization the
production of the plant will again become competitive at the Russian
and Georgian markets. The plant is becoming 40 years old this year
and much should be changed as metal is becoming older.
In future we should lead the plant to the European standards, when
it will have 50-100 workers. I think that we shall manage to do it
by 2012. Today we employ 595 workers.
Some mass media claim that your companies pay little taxes and have
some budgetary debts?
Our cement plant has paid 320mln AMD in taxes rather than 160mln AMD -
as was mentioned in the press. Our oil trade company Mika Corporation
is the 15th biggest tax payer in Armenia. The media claimed that
we have some air tax debts but this is not true. According to the
contract, we should pay air tax on a monthly basis. In July we carried
almost 100,000 passengers, i.e. 3,500-4,000 people a day. The air tax
is 10,000 AMD, so, we should pay 1bln AMD. Our current debt is 350mln
AMD against allowed 500bln AMD. We will pay this sum within the month.
In the meantime, we have to pay fines accrued in 2006. We bought the
company in 2005 and the fines accrued because we had no access to
its accounts and were unable to pay taxes in time.
Armavia is a huge complex organism. It is connected with over 35
airports and over 20 navigation services worldwide as well as with
different maintenance organizations and ticket media. Any deficiency
in their work affects our company. Our tickets are sold all over the
world, even in the United States. Aviation is an unprofitable business
and lives on governmental grants. We get no money from our government.
Even more, we pay them almost 400mln AMD a year.
Just compare our prices with those in Georgia, Azerbaijan, Uzbekistan,
Tajikistan and you will see that ours are 2-3 times lower.
Are you planning to raise the prices?
Our ticket prices and service costs (navigation, airport, etc.) and
any changes therein depend on the EUR rate as is the case all over
Europe. As regards our leasing contracts, all of them are in USD. For
kerosene we also pay in US dollars.
May 15 2009 you launched Abit, a factory producing construction and
road bitumen. In the spring 2010 it was supposed to reach its full
capacity - 43,000 tons a year.
The plant is already close to its full capacity. For the moment, we
are buying mazut (fuel oil). We had some problems with raw material
supplies but we have already solved them. The factory already has
contracts and we are looking forward to its stable operation in the
very near future.
You are certainly aware of the Government's plans to build an oil
pipeline Tabriz (Iran)-Yeraskh (Armenia). What do you think about
this project? It seems that it may curb your business as you are the
biggest oil product importer in Armenia?
We should regard such projects from the point of view of national
rather than personal interests. Otherwise there will be no progress.
The objective of this project is to make oil products cheaper. Today
we pay 25-30% extra for the oil products delivered via Georgia. The
pipeline will substantially reduce our expenses. Reduction in petroleum
prices will lead to reduction in agricultural and other prices.
But should a government deal in such business?
Iran does not want to deal with anybody but a government. When the
pipe is ready the Energy Ministry may well wish to sell it to big
oil traders.
Have they offered you to join the project?
Not yet. I should know what kind of oil products should be imported.
At present there are no such oil products in Iran which we use. Their
diesel fuel is of low quality, there is no normal petrol, kerosene is
not good either. Today, Europe requires that the content of sulphur
in petroleum should not exceed 0.01. Iran does not have such products.
There is hope that new oil products processing plants will be built
in Iran which will produce high quality oil products.
Do you mean that the oil products you are importing into Armenia for
the moment meet the European standards?
I can't speak for others but our products meet all European standards.
The octane number of AI97 petroleum imported from Greece is 97.2-97.8.
The octane number of Israeli AI95 petroleum is 96. We also import
from Romania. Greece and Romania are EU members and cannot produce
sub-standard fuel.
So, one can bring high quality fuel and then blend it?
Maybe somebody blends it but we don't. You can get our fuel at any
filling station at any moment and can check its octane number.
I think that big companies should care for their reputation and
further development. Today, we are training people with modern
ways of thinking and working - and not only in aviation but also in
industry and trade. We are spending big money on this training. At
Armavia we pay pilots from $2,000 to $12,000 a month depending
on their qualification. $12,000 is the salary of a pilot of the
highest category - the one who can land a plane in any weather at
any airport of the world. Even foreigners are happy to work for such
a salary and we have pilots from the United States, Australia and
Spain. But still we prefer training young Armenian pilots so as to
ensure intergenerational continuity
From: A. Papazian
Artur Yernjakyan
ArmInfo
2010-08-24 10:36:00
Interview with President of Mika Limited Holding Mikhail Bagdasarov
Mr.Bagdasarov, a few days ago our agency reported that EL AL (Israel),
UTair (Russia), Aerosvit (Ukraine) and Armavia (Armenia) have signed
a declaration of intention to create an international air union - WE
(Western-Eastern). Why are you going to create such a union?
Yes, we are actually negotiating this possibility but this is just
a possibility yet.
Today, the situation on the air market is so hard that some
companies are going bankrupt or merging so as to survive. One can't
stand competition alone. The fact that Armavia has been noticed and
invited to join such a union proves that our company has quite a good
reputation and quite an effective policy. Armavia may become a highly
reputed company.
As far as I understand, this project is about cooperation rather
merger.
Yes, it will be based on cooperation. There are lots of such unions.
We have been offered cooperation and are about to accept the offer.
The main thing about such unions is the opportunity to help each other,
to create a joint system of maintenance and flight management.
This union may as well involve American or European companies.
2009 was a crisis year for aviation. How did the crisis affect your
company's work?
In 2009 we had no decline in passenger operations. There was certain
decline in early 2010. While the crisis led to bankruptcy of many
companies and closing of flight, we are trying to extend geography of
our flights and to fill a free niche in the market. We started flying
to Barselona, Zurich and India. It still brings losses to us, though
on the other hand, we have enhanced our position in Europe (8-9 flights
against 4 flights in the past), and hope for extra benefits in future.
Could you give specific figures on passenger traffic. Did you make
profit last year?
In 2009 as compared with 2008 our passenger traffic increased by 14%
to more than 700 thsd passengers.
Five years ago when Armavia was created, the traffic volume was 400
thsd passengers. Our company has all the chances to increase its
passenger traffic up to 800 thsd passengers by the end of 2010 thanks
to opening of the new flights and increasing frequency of flights.
The crisis has not ended yet and continues affecting passengers which
have started flying seldom because of the financial problems. Armavia
has a big circulation and small profit 1-2%. It is hardly possible for
any other company of Armenia to function with such a profit, he thinks.
This is a very hard business. For this reason, many companies go
bankrupt. But we hope to develop further.
It was reported earlier that in late 2009-early 2010 Armavia was
supposed to receive two Sukhoi Superjet 100s?
Both liners recently left Yerevan where they had been tested. They
flew to Gyumri and Yerevan.
Their performance was excellent for our severe climatic and geographic
conditions. Because of heat and highland many planes are forced to take
less passengers on board, for instance 125-130 instead of supposed 150,
but there is no such problem in case of the Sukhoi liner.
We are planning to start flying on the liners in December 2010. The
second liner will be delivered in March-May 2011. The place for
Armavia is ready and is undergoing certification.
Recently, the Government of Armenia decided to put up for auction the
former presidential plane Tu-134. Are you interested in acquiring it?
We are not interested because that plane is economically unsound. It
consumes too big volumes of kerosene, its service is expensive and
flights by such planes are banned in the USA and Europe. This plane
is geared to yesterday.
Investors from Africa, Iran or Latin America may buy the plane for
they do not care for the quality of flights. The fact that the plane
can fly is enough for them to buy it.
Let's switch from aviation to cement. I would like you to tell me about
Mika Cement. Its last financial report says that in 2009 that company
experienced a slump in the profit - 125 times lower than a year before.
The global crisis has curbed construction. Today, there is almost
no private construction in Armenia, almost all ongoing projects are
sponsored by the state.
You planned to produce 200,000 tons of cement in 2009. Did you do it?
No, we failed. Today, we are facing high production costs. We are
forced to use new equipment so that to automatize the plant, where
prime cost growth thanks to growth of tariffs for gas and thanks
to hand work, which will turn into the automate one in future. We
have no other way to survive. We thought that hand work will give an
opportunity to people to earn money, but now we see that the plant
may simply shut down and in that case everybody will lose job. The
leadership of the plant never axes. Thanks to automatization the
production of the plant will again become competitive at the Russian
and Georgian markets. The plant is becoming 40 years old this year
and much should be changed as metal is becoming older.
In future we should lead the plant to the European standards, when
it will have 50-100 workers. I think that we shall manage to do it
by 2012. Today we employ 595 workers.
Some mass media claim that your companies pay little taxes and have
some budgetary debts?
Our cement plant has paid 320mln AMD in taxes rather than 160mln AMD -
as was mentioned in the press. Our oil trade company Mika Corporation
is the 15th biggest tax payer in Armenia. The media claimed that
we have some air tax debts but this is not true. According to the
contract, we should pay air tax on a monthly basis. In July we carried
almost 100,000 passengers, i.e. 3,500-4,000 people a day. The air tax
is 10,000 AMD, so, we should pay 1bln AMD. Our current debt is 350mln
AMD against allowed 500bln AMD. We will pay this sum within the month.
In the meantime, we have to pay fines accrued in 2006. We bought the
company in 2005 and the fines accrued because we had no access to
its accounts and were unable to pay taxes in time.
Armavia is a huge complex organism. It is connected with over 35
airports and over 20 navigation services worldwide as well as with
different maintenance organizations and ticket media. Any deficiency
in their work affects our company. Our tickets are sold all over the
world, even in the United States. Aviation is an unprofitable business
and lives on governmental grants. We get no money from our government.
Even more, we pay them almost 400mln AMD a year.
Just compare our prices with those in Georgia, Azerbaijan, Uzbekistan,
Tajikistan and you will see that ours are 2-3 times lower.
Are you planning to raise the prices?
Our ticket prices and service costs (navigation, airport, etc.) and
any changes therein depend on the EUR rate as is the case all over
Europe. As regards our leasing contracts, all of them are in USD. For
kerosene we also pay in US dollars.
May 15 2009 you launched Abit, a factory producing construction and
road bitumen. In the spring 2010 it was supposed to reach its full
capacity - 43,000 tons a year.
The plant is already close to its full capacity. For the moment, we
are buying mazut (fuel oil). We had some problems with raw material
supplies but we have already solved them. The factory already has
contracts and we are looking forward to its stable operation in the
very near future.
You are certainly aware of the Government's plans to build an oil
pipeline Tabriz (Iran)-Yeraskh (Armenia). What do you think about
this project? It seems that it may curb your business as you are the
biggest oil product importer in Armenia?
We should regard such projects from the point of view of national
rather than personal interests. Otherwise there will be no progress.
The objective of this project is to make oil products cheaper. Today
we pay 25-30% extra for the oil products delivered via Georgia. The
pipeline will substantially reduce our expenses. Reduction in petroleum
prices will lead to reduction in agricultural and other prices.
But should a government deal in such business?
Iran does not want to deal with anybody but a government. When the
pipe is ready the Energy Ministry may well wish to sell it to big
oil traders.
Have they offered you to join the project?
Not yet. I should know what kind of oil products should be imported.
At present there are no such oil products in Iran which we use. Their
diesel fuel is of low quality, there is no normal petrol, kerosene is
not good either. Today, Europe requires that the content of sulphur
in petroleum should not exceed 0.01. Iran does not have such products.
There is hope that new oil products processing plants will be built
in Iran which will produce high quality oil products.
Do you mean that the oil products you are importing into Armenia for
the moment meet the European standards?
I can't speak for others but our products meet all European standards.
The octane number of AI97 petroleum imported from Greece is 97.2-97.8.
The octane number of Israeli AI95 petroleum is 96. We also import
from Romania. Greece and Romania are EU members and cannot produce
sub-standard fuel.
So, one can bring high quality fuel and then blend it?
Maybe somebody blends it but we don't. You can get our fuel at any
filling station at any moment and can check its octane number.
I think that big companies should care for their reputation and
further development. Today, we are training people with modern
ways of thinking and working - and not only in aviation but also in
industry and trade. We are spending big money on this training. At
Armavia we pay pilots from $2,000 to $12,000 a month depending
on their qualification. $12,000 is the salary of a pilot of the
highest category - the one who can land a plane in any weather at
any airport of the world. Even foreigners are happy to work for such
a salary and we have pilots from the United States, Australia and
Spain. But still we prefer training young Armenian pilots so as to
ensure intergenerational continuity
From: A. Papazian