On February 16, the Russian Transport Supervision Service issued a press release to announce a list of ten Russian airlines (including UTair) which are temporarily banned form charter flights in EU countries for having committed a number of violations in conducting SARA inspections from 2004-2006.
According to Rostransnadzor, all limitations on the flights of the abovementioned companies will be removed in the event that they submit a reasonable plan of action to rectify the above violations. According to our forecasts, an affirmative decision on UTair will be adopted in the coming days and this ban will not produce any tangible impact on the airline’s financials.
We believe that such a ban could only produce a short-term impact on the air carrier’s stock valuations and will not impair their fundamental value. We reiterate our upbeat valuation of UTair with a target price of $0.06 per share, which implies 25% upside potential.
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