S7 Airlines

Ground

In 1957, the first civilian flight on the route Novosibirsk - Moscow was made on a Tu-104 airplane from a military airfield in the Novosibirsk Region, the future Tolmachevo Airport ^[3] . This event is considered the birth of the Tolmachev United Squadron ^[4] .

After 35 years - in 1992 - the state airline Siberia was formed on the basis of the Tolmachev United Air Squad ^[3] . In 1994, the company was privatized. Since 2001, negotiations were held on the sale of the state block of shares in Siberia (25.5%), but there were no buyers ^[5] . Then, Siberia received the international IATA code .

In 2001, Siberia Airlines became a full member of the IATA International Air Transport Association ^[6] . At the same time, the company bought Vnukovo Airlines and became the second largest airline in Russia and the first in terms of traffic on domestic routes ^[7] .

Rebranding and further development

The turning point for Siberia was 2008: on its basis and structural subdivisions, the S7 Group was created, rebranding and colorization of the fuselage of aircraft were carried out ^[8] .

On November 15, 2010, S7 Airlines, together with its sister airline Globus, entered the Oneworld international aviation alliance, which allowed the airline to sell tickets through a code-sharing partnership with leading airlines in the world ^[1] .

In 2011, the state again put up its S7 Airlines stake three times at auctions, but all of them did not take place due to the lack of bidders. Experts attributed the failure to privatize the package to the fact that it is not interesting for portfolio investors due to the high starting price (1.8 - 2.9 billion rubles), and for strategic investors because of the size of the package, which does not give the right of real influence on airline management ^[9] .

In May 2013, the S7 Group won the tender for the purchase of a state-owned stake in Siberia Airlines, offering 1 billion 133 million rubles for a 25.5% stake in the carrier ^[10] .

On October 21, 2015, co-owner of S7 Group Vladislav Filev signed an agreement to purchase at least 51% of Transaero's shares. According to Filev himself, the purpose of the purchase was to prevent the bankruptcy of Transaero , which has suffered financial problems since the end of 2014 ^[11] . Subsequently, Vladislav Filev refused this transaction.

In 2016, S7 Airlines was the first among Russian airlines to introduce the latest NDC (New Distribution Capability) technology developed by the International Air Transport Association . The communication between the airline and the agencies is carried out through a tool developed by the S7 Group in accordance with IATA NDC standards and called the S7 Agent API. S7 Airlines sold its first tickets using the NDC standard in March 2016. As of July 2016, only about 20 airlines in the world use the NDC protocol ^[12] .

In early 2017, the S7 began flying its first regional aircraft, the Embraer E170LR . The airline received the liner in an updated livery developed by the British agency Landor. This livery has also been applied to the new Airbus A320neo . Thus, the airline began a new phase of rebranding. The change of liveries was in parallel with the renewal of the fleet.

At the end of 2016, S7 Airlines replaced the paper letter of credit by switching to the blockchain platform. ^[13]

In August 2019, S7 Airlines temporarily returned the name “Siberia Airlines” and launched an initiative to replenish the forest massif lost during fires in Siberia . Starting from August 1, 2019, the company deducts 100 rubles from each ticket sold on the website and in the mobile application for flights to Siberian destinations. On the official page of the campaign , funds are being collected to the replenishment fund - you can donate any amount or miles (for active participants of the S7 Priority loyalty program). In September 2019, the airline completed raising funds for planting 1,000,000 trees and returned to the S7 Airlines brand again.

Owners and management

The controlling stake in Siberia Airlines JSC, which is 71.3%, belongs to the S7 Group . The state sold its 25.5% to C7 Group of Companies on May 30, 2013, the transaction is subject to execution by order of the Government of Russia ^[14 The remaining shares are held by the management of S7 Airlines ^[15] .

On May 12, 2009, the board of directors of the airline appointed Vladimir Obyedkov as the new general director of Siberia Airlines. Prior to him, this post was held by Vladislav Filev , who is now a co-owner and CEO of the parent company S7 Group ^[16] .

Mergers and Acquisitions

In 2002, Siberia Airlines gained control of Vnukovo Airlines OJSC , as a result of which it expanded the network of routes from Moscow. In the same year, the airline bought a controlling stake in Armavia Airlines, then reselling it in 2005. .

In 2008, an offer to purchase 43% of Austrian Airlines was sent to the Austrian State Property Management Agency (OeIAG). If the transaction were concluded, the Russian airline would receive an additional 3 million passengers a year at Vienna Airport ^[17] . However, the deal for S7 fell through due to the fact that the company did not have time to hand over the documents. As a result, Austrian Airlines was acquired by Lufthansa ^[18] .

In addition, Siberia Airlines participated in the tender announced in June 2014 for the purchase of the Cyprus Cyprus Airways, which is suffering losses. The S7 Airlines application was rejected, and Greek Aegean Airlines and Irish Ryanair were admitted to the final stage of the tender ^[19] .

On October 20, 2015, the general director and co-owner of the S7 Group, Vladislav Filev and the largest shareholder of Transaero Airlines, which was in trouble at that time, Alexander Pleshakov signed an agreement on the sale to S7 shareholders of a controlling stake (“at least 51%”) of Transaero ^[11] . It was reported that the new owners will try to avoid the bankruptcy of Transaero. The Ministry of Economic Development proposed to give S7 the route network of Transaero ^[20] . However, subsequently, the deal fell through, according to Natalia Fileva , co-owner of S7 Group , due to the fact that Transaero shareholders were unable to collect a controlling stake, which is not burdened with obligations to third parties ^[21] .

On March 2, 2016, co-owner of S7 Group Vladislav Filev announced plans to create Charlie Airlines in Cyprus for flights in Europe ^[22] . S7 will own about 40% of the new carrier. According to other sources, the company will be owned personally by the spouses Vladislav and Natalia Filev ^[23] . By the end of 2016, two Airbus A319-100 aircraft should be transferred to the new airline ^[24] . Currently, there are regular flights under the Cyprus Airways brand.

On August 8, 2019, it was renamed back to Siberia to recall the forest fires that had already spread over more than 3 million hectares. Collected funds began to plant 1,000,000 trees. When the required amount will be collected. The airline will return renamed to its former name. Present at the scene, the Airbus A320 was rolled out of the paint shop in Mineralnye Vody in an updated livery. ^[25]

Performance Indicators

Below are the production and financial indicators of S7 Airlines (not including Globus airlines) since 2011:

S7 Airlines together with its subsidiaries forms an extensive route network, which includes more than 205 destinations (141 are Russian) to 34 countries in Europe, Asia and the Middle East. Many other flights are operated by partner airlines under code-sharing agreements ^[32] .

Code-Sharing Agreements

The airline also has partners with whom it performs part of its flights under a code-sharing agreement ^[33] :

Fleet History

In different years of its history, S7 Airlines operated various types of aircraft . Until the end of 2008, such airliners as Il-86 , Tu-154 and Tu-204 were in the airline's fleet. In 2004, S7 Airlines launched a plan to upgrade its air fleet. November 17, 2008 the operation of Soviet aircraft in the company was completely discontinued ^[34] .

On May 29, 2007, the airline signed a contract with Boeing for the purchase of 15 Boeing 787 airliners and an option for another 10 such aircraft, thus becoming the first customer of these aircraft among Russian airlines. The delivery time for the first aircraft is 2014; the catalog value of 15 liners is $ 2.4 billion ^[35] . However, at the end of January 2009, due to the economic crisis and the difficult financial situation of the airline, this contract was terminated ^[36] .

Since April 2008, S7 Airlines began to operate flights on the new Airbus A320 aircraft . Under an operating lease agreement concluded with ILFC , in 2008 S7 Airlines received 4 aircraft of this type. All are equipped with CFM56 CFM International engines . In 2009, deliveries of another 25 aircraft began.

In April 2015, the Globus subsidiary ceased operation of the Boeing 737-400 .

On April 6, 2016, the head of the company Vladimir Obyedkov announced the signing of an agreement with Airbus to supply 5 aircraft of the Airbus A320neo family ^[37] . In September of the same year, a contract was signed for the supply of leased nine aircraft of the Boeing 737 MAX family. Thus, the company became the first carrier in Russia to operate the aircraft of these two new families ^[38] .

In December 2016, S7 Airlines announced the signing of an agreement with the leasing company GE Capital Aviation Services (GECAS) on the supply of 17 regional Embraer E170 aircraft ^[39] . All aircraft arrived during 2017.

Current Fleet

As of April 2019, the average age of the entire fleet of the S7 Group is 10.0 years. The fleet includes the following types of aircraft ^{[40] [41]} The main place for registration of aircraft of the S7 Group is Bermuda.