Research Notes

According to our estimates, UTair Airlines is one of the most attractive investment options in the Russian air carrier segment. UTair's strong investment appeal lies in the following:

• An impressive spike in domestic demand for airline services is currently being bolstered by favorable economic situation in Russia which will most likely help the company to generate even more revenues
  
  
• UTair's diversified operations which has made it possible for the company to reduce total industrial and operational risks is its key advantage over other Russian airlines
  
  
• UTair's strategy aimed at upgrading its aircraft fleet has resulted in higher fuel efficiency
  
  
• UTair's dependence on leasing contracts is only marginal, since the company has a large fleet of own aircraft
  
  
• UTair's helicopter business has soaring margins, since the company is the leader in the Russian market of helicopter services
  
  
• Rapid expansion to international helicopter services markets has further shored up the stability of the company's operations
  
  
• UTair has an overall efficient corporate structure and has recently improved its corporate governance and transparency of its operations

According to our fair price estimates on UTair, the company's common shares now hold 46.7% upside potential to reach the $0.66 price level. We assign a Buy recommendation to UTair's stock.

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Vladimir Sergievskiy

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