Aeroflot targets Virgin take-over

Flying Aeroflot is a virgin experience for many passengers

Aeroflot is expected to be confirmed as the buyer of Sir Richard Branson's low-cost airline, Virgin Express Ireland, early next week.

A spokeswoman for Virgin Express Ireland (VEI) confirmed to BBC News Online that an announcement of the take-over by the Russian airline will be made next Monday or Tuesday.

Shannon based VEI, a subsidiary of Virgin Express Holdings, was put on sale in December after two-and-a-half years of loss-making operations.

No more express flights to Shannon for Sir Richard

Aeroflot is expected to buy the 59% stake of VEI owned by Virgin Travel, and which analysts value at a maximum of £10m. The remaining 41% is held by public shareholders

After Virgin announced it wanted to sell VEI, it said existing routes would be flown until 15 March, and the airline would be shut down if no buyer emerged.

Most of the carrier's 220 employees should retain their jobs under Aeroflot, said the VEI press officer.

European ambitions

Aeroflot has been looking to expand into the European market and already operates out of Shannon on its scheduled flights between Europe and America.

The main interest for Aeroflot is gaining access to Europe's "open skies" agreements, allowing it to fly between European cities.

At the moment, Russia has bilateral agreements with all of Aeroflot's European destinations, but the flights must start or finish in Moscow.

Aeroflot has long harboured expansion plans and has said it will join the SkyTeam alliance with Delta Airlines, Air France, Korean Airlines and Aero Mexico within three years.

Virgin territory

VEI entered the crowded market for low-cost fares between Ireland and Britain in 1998. At the time, Sir Richard said he did not expect to significantly penetrate the market share of other low fare airlines.

Virgin Express' losses in 2000 grew to £8.8m from £1.9m a year earlier and VEI's routes were slashed in order to cut costs.

Babyflots

After the collapse of Communism, Aeroflot was broken-up and hundreds of "Babyflots" were created in the states of the former Soviet republics.

Aeroflot was able to get rid of most of its oldest planes. It has not crashed once in the past 10 years and its safety record is now considered equal to that of British Airways and Air France.

A replacement programme to buy foreign-made planes means it now has 2 Boeings and 11 Airbuses in its fleet of 111. The tie-up with VEI will add five new foreign-made planes to the fleet.