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Aeroflot’s Airbus deal delayed not grounded

Russia

The Russian and French prime ministers looked on as Russia's national carrier, Aeroflot, signed off on an deal to buy 18 new Airbuses last month during a state visit to Airbus Industrie's headquarters in Toulouse, France.

The deal for the A319 and A320 medium-range aircraft was first mooted this summer but Aeroflot has been struggling to find funding and to overcome lobbying by the Russian aviation lobby for the airline to buy Russian.

While the rest of the world's aviation industry remains mired in depression, Aeroflot has had a good year. It failed to add significantly to passengers carried over the first nine months of this year but thanks to corporate restructuring it is on track to nearly quadruple its net profit to $75 million this year. It's a far cry from 1999 when it lost $60 million. Its biggest financial advantage is that it continues to collect the fees other countries' carriers pay to use Russian airspace - a hangover from the Soviet era.

Dumping the elephant

With improving financial health and an extensive corporate rebranding slated for this winter (the company has finally decided to dump its flying elephant mascot and will ditch its hammer-and-sickle logo next), the biggest obstacle Aeroflot faces to expanding its market share in Europe is the Russian government's limit on the number of foreign-made aircraft it can buy.

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