ECONOMY

Bulgaria thrashes out new plan to privatize flag carrier

SOFIA (Reuters) – Bulgaria’s government agreed on a new plan to sell 100 percent of flag-carrier Bulgaria Air yesterday after a previous proposal failed to win parliamentary approval for over a year. The impoverished Balkan country aims to privatize the profitable airline as it pushes through structural reforms and reduces the State’s influence in the economy by selling assets ahead of planned EU entry in 2007. «Today, the Cabinet unanimously accepted a strategy for the sale of Bulgaria Air,» Transport Minister Nikolai Vassilev told journalists after a government meeting. «Big airlines are the preferred buyers.» Vassilev, a leading member of ex-king Simeon Saxe-Coburg’s centrist Cabinet, said the sale would proceed in two stages. In the first, the government will accept offers only from large airlines from EU member states that register in Bulgaria. If less than four show up at the table, financial investors can bid in a second stage. Price will be the primary factor considered, and the buyer will also be expected to increase Bulgaria Air’s capital by 20 million levs ($12.7 million). The company’s current basic capital is just over 10 million levs, Vassilev said. In an original plan introduced in July 2003, the carrier was to be sold in a two-stage tender, with a majority earmarked only for domestic strategic investors. Foreign companies were to be limited to a minority stake, and the plan envisioned Bulgaria Air acting as the state flag carrier after the sale. But «national carrier» status will lose relevance when Bulgaria joins the EU’s open-skies agreement, which it intends to do next year. Flights between Bulgaria and EU countries now are governed by bilateral pacts that limit carriers and prices. The government aims to conclude the sale before its mandate ends in mid-2005. In the first seven months of the year, its profit was 2.4 million levs, versus net income of 1.5 million levs in all of 2003 and a full-year loss of 871 million levs in 2002. «This is one of the most profitable airlines in the world, especially in regards to return on equity,» Vassilev said. Currently, Bulgaria Air flies to 18 destinations in Europe with a leased fleet of eight Boeing aircraft. Austrian Airlines and two private Italian airlines – Volare and Air One – have expressed interest in the sale.