News / Volga-Dnepr UK's options narrow as financial details are unveiled

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More details have emerged on Volga-Dnepr UK’s financial position, after the administrators filed a new report.

Perhaps surprisingly, Volga Dnepr UK widened its losses in 2020, in what was generally a good year for cargo carriers.

According to the administrators: “Between 2019 and 2020, revenue increased by $120m to $191m, with loss before tax and interest increasing by $54m, from -$1m in 2019 to -$55m in 2020.

“It is noted there was a significant deterioration in profitability in the year to 2020; however, the major disruption to trading did not occur until the geopolitical events between Russia and Ukraine in February 2022, and subsequently June 2022, when sanctions were imposed on the majority shareholder, Alexey Isaikin.”

Debts to the company amounted to $119m in 2020; but a significant portion is under dispute with Boeing. Some $60m in prepayments on an aircraft were made to the aircraft manufacturer – “reservation for a commercial aircraft which was not delivered”.

“Boeing has disputed that there is any balance owing to VDUK under the contract.”

The VDUK ledger also shows trade receivables of £25,000.

“We understand that the balance principally related to debits owing from Bolloré Logistics, France.”

Volga-Dnepr UK had creditors accounting for some $70m in 2020, and inter-group receivables were some £575,000, while long-term loans to other parts of the Volga-Dnepr group amounted to some £53m. The administrator warned that recovery of these debts would be “subject to the lifting or easing of sanctions”.

VDUK holds combined cash balances of £2.6m in in US dollars, euros and pounds with Citibank.

“We understand that VDUK also holds certain cash balances, which we will seek to recover for the benefit of the administration estate. Some of this cash is in Russia, which is unlikely we will be able to physically recover.”

Employees are said to be owed some £900,000, while trade creditor claims are £400,000.

A building owned by VDUK in Bishops Stortford, with a book value of £216,000, is likely to be sold, perhaps for as much as £900,000.

There are three possible exit routes for the company: dissolution; compulsory liquidation; or creditors voluntary liquidation, explained the administrators – which will take some £852,000 in fees.

Meanwhile, Simple Flying has been closely following the whereabouts of the aircraft leased by AirBridgeCargo: one 747-400F has been returned to China after Russia agreed to allow Bank of China to repossess it.