ECONOMY

Bulgaria sells flag carrier to Hemus Air

SOFIA (Reuters) – EU newcomer Bulgaria sold its troubled state flag carrier Bulgaria Air yesterday for 13 million levs ($8.76 million) to privately owned Hemus Air. Bulgaria, which joined the European Union on Monday, put the state airline in private hands in the hopes of strengthening it in the face of competition from European carriers after it opens its skies to the bloc’s single market. «I hope from now on Bulgaria Air will develop its business much more successfully,» privatization agency head Todor Nikolov told a news conference. In the sale tender, Hemus Air outbid the only other contender in the sale, Italy’s Air One, and pledged to invest -82 million over the next five years. Bulgaria Air has not released financial results for 2006, but sources close to the company say it lost around 8 million levs in the first nine months – a situation Hemus Air hopes to remedy. «Our first task is to put the company back on its feet,» said Mirolub Panchev, executive director of Hemus Air’s owner, Balkan Hemus Group. The Bulgarian state will keep a golden share in Bulgaria Air for five years to «protect national interests.» Established in late 2002 to replace the bankrupt Balkan Airlines, Bulgaria Air is the main conduit for European tourists to Bulgaria’s booming Black Sea and mountain tourism resorts. It has around a 30 percent share of flights to and from Bulgaria. It flies to around 30 destinations with 11 leased Boeings. Hemus Air has also launched talks with Airbus and Boeing for the supply of 15 new aircraft to replace that fleet over the next five years. European Union authorities have banned Bulgarian airlines from operating flights within the bloc other than those already agreed under bilateral agreements because they fell short of EU safety standards. But the Transport Ministry has said the measure is only temporary and will be rescinded once Bulgarian airlines receive EU-required certification.