Air Arabia is responsible for managing Fly Arna - Finance Minister

ArmInfo.The management of the Fly Arna airline was not the responsibility of the Armenian National  Interests Fund (ANIF) but of the operator, in this case Air Arabia. Minister of Finance of the Republic of Armenia Vahe Hovhannisyan stated on January 31 at the final press conference, commenting on the developments around the national carrier, as well as the efficiency and expediency of the public funds spent by ANIF.

According to the minister, last year the financial authorities of the  Republic of Armenia together with the IMF studied the state policy  pursued in the private sector, as well as the necessary share of  state involvement. In particular, the activities of ANIF were  reviewed. "We came to the conclusion that the range of tasks set for  ANIF is too wide, they are not so specific, and the mandate of the  Fund should be revised and clarified," Hovhannisyan noted.

According to the minister, today there are various comments regarding  the salaries paid to the Fund's employees. "There are people who were  paid high salaries and there are comments that these people provided  high results. But there is also the opposite opinion. The issue is  controversial, since the expected results of their activities are not  clearly defined. Consequently, the government decided to specify the  tasks assigned to ANIF, to make them measurable and consonant with  the economic policy of the authorities," he explained, adding that as  part of these works, the authorities initiated a change in the Fund's  management model.

Touching upon the government's decision of October 2021 to allocate 4  billion 733 million 720 thousand drams (about $12 million) from the  state treasury to increase the authorized capital of the ANIF fund  (the state represented by ANIF became the owner of 49% of the shares  of Fly Arna, ed. note), Vahe Hovhannisyan said that the funds were  aimed at filling the gap, which was in the form of investment  obligations of the Armenian side within the framework of the airline  formation project. (at the beginning of January, ANIF announced that  it had attracted a significant amount of foreign direct investment in  the amount of 84.6 billion drams (at the exchange rate as of November  9, 2023) or $210 million. 10 million dollars of the total amount was  allocated to support the Fly Arna project ( the national airline of  Armenia - ed. note).

Fly Arna was founded in December 2021. However, a year and a half   later, it encountered problems caused, according to available data,   by the Armenian side's failure to comply with the terms of the   agreement when creating the airline. 49% of the company's shares   belong to the Armenian State Interest Fund (ANIF), and the same  amount belongs to the Arab International Business Company, affiliated   with Air Arabia.  The remaining 2% of the shares are the property of   Lebanese businessman of Armenian origin Varuzhan Nergizyan.

On January 30, 2024, Fly Arna officially announced the suspension of  flights "due to the company's operational changes." ""The carrier is  actively working on resuming its services and looks forward to  welcoming passengers back onboard soon," the airline said in a  statement. Earlier, ArmInfo reported about problems that had arisen  with the air  carrier. The agency, citing sources close to the  airline, noted that  the Armenian side did not fulfill a number of  previously agreed conditions when creating the joint venture. The  talk, among other  things, was about subsidizing passenger  transportation by the RA government. 

The carrier ceased flights on January 10, when the last flight was  operated. Prior to this, one of the carrier's main shareholders, Air  Arabia, recalled one of its two aircraft. Now the fate of the airline  must be decided by the Board of Directors, whose meeting will be held  this week. After January 10, all airline employees had their salaries  cut by 50%.  ANIF was established in 2019 with a mandate to  consolidate and effectively manage the ownership of Armenian  state-owned enterprises, to promote export growth and investments in  Armenia by providing co-financing in large-scale projects at their  initial stage of development.  The scope of its activities covers, in  particular, renewable energy, agriculture, healthcare, services and  tourism. During its existence, ANIF has implemented about a dozen  joint investment projects with Armenian and foreign investors. As of  December 31, 2022, ANIF's net accounting profit amounted to 1.76  billion drams (about $4.5 million).