UIA
Ukraine International Airlines may be experiencing difficulties paying for its services. The Kyiv Commercial Court has seized the airline's hryvnia-denominated bank account and prohibited it from opening new ones. The court issued the ruling on November 18.
According to information posted on UIA's official website, the carrier has two current accounts: one in hryvnia and one in foreign currency. Both are held at Finance and Credit Bank. Serhiy Kravets, co-owner of the online ticketing service Tickets.ua, explains that UIA splits its revenue from hryvnia and foreign currency ticket sales approximately 50%-50%. The court seized the funds following a lawsuit filed by Kyiv's First Deputy Prosecutor, who demanded that UIA repay a debt of 5,4 million hryvnias. The debt accrued to a special fund that finances state aviation expenses.
"The plaintiff justifies the need to take measures to secure the claim by the fact that UIA Airlines has not voluntarily paid the mandatory payment of UAH 5,38 million in fees received by the airline from passengers and shippers for the sale of transportation services, which indicates the company's evasion of payments to the State Specialized Fund for Financing National Expenditures on Aviation Activities and Ukraine's Participation in International Aviation Organizations," the court ruling stated.
This isn't the first lawsuit challenging UIA's debts to the special fund. As previously reported by Kapital, on August 1, UIA filed a lawsuit in the Kyiv District Administrative Court against the State Aviation Service, demanding that the issuance of invoices for the special fund fee be declared unlawful. The court dismissed UIA's lawsuit. The lawsuit did not specify the total amount in dispute. However, according to the Ministry of Infrastructure, as of October 8, 2014, the airline's debt to the special fund amounted to UAH 24,8 million.
Work will become more difficult
Aerojet CEO Anatoly Mazurenko says that if funds in the airline's account are frozen, UIA will have difficulty paying for services and products within Ukraine. "Payments between residents within the country are only allowed in hryvnia, although many fares are determined in hard currency. However, invoices are issued in hryvnia at the bank's exchange rate," he explains.
Air carriers pay for jet fuel, airport services, in-flight catering, and maintenance services in the national currency. "Overall, these are multi-million hryvnia sums every day," says Mazurenko, citing the example of a Kyiv-Dubai flight, the hryvnia portion of which can reach 300 hryvnias. Buying fuel and in-flight catering in bulk from foreign airports can partially solve the fuel and catering problem, but this approach is not sustainable, as it's impossible to refuel a fully loaded aircraft 100% of the time. The expert admits that UIA could negotiate a credit arrangement for fuel and catering supplies, but he couldn't predict how long suppliers would agree to provide their goods and services in this manner.
The Kyiv prosecutor's office is attempting to recover UAH 5,4 million from UIA.
Andriy Guk, a senior lawyer at the law firm Marchenko Danevych, believes that if UIA's current hryvnia account is frozen, it could enter into a temporary payment agreement for services and goods with another company owned by its shareholders. The airline itself did not respond to Kapital's official request until the newspaper was sent to the printers.
Awaiting a determination
Currently, UIA's accounts at Finance and Credit Bank—both hryvnia and foreign currency—are operational, Natalia Napadovska, head of public relations at Finance and Credit Bank, told Capital. When a court imposes a freeze, the bank account is not automatically blocked, explains Rostislav Kravets, senior partner at the law firm Kravets & Partners. The prosecutor's office or the State Aviation Service must submit the court's decision to the State Enforcement Service (SES), which then contacts the bank, the lawyer explains. The State Aviation Service has not applied to the SES. "Filing an application to the SES to freeze legal entities' accounts exceeds the authority of the State Aviation Service in accordance with Article 17 of the Law of Ukraine 'On Enforcement Proceedings,'" the agency's chairman, Denys Antonyuk, explained to Capital.
The prosecutor's office will decide whether or not to file a complaint with the enforcement service only after receiving a court order to seize funds in the UIA account, the Kyiv prosecutor's office press service told Capital.
Dmitry Ulyanitsky, Capital
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