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OLEG DERIPASKA’S BOEING FOR SALE

By John Helmer, Moscow

In the good old days, when Rusal, Russia’s aluminium monopoly, was taking in great volumes of cash and Oleg Deripaska, the controlling shareholder, had his associates emptying it for other business as fast as they could, Deripaska operated [1] a fleet of aircraft, large and small. That the biggest of the fleet, a 5-year old Boeing 337, is now in the catalogue of an aircraft broker for sale, indicates how diminished the company’s fortunes have become, and how little Deripaska himself controls what remains of the cashflow. In the mock-up, that is Deripaska inside the lounge of the aircraft, sitting next to his new creditor, Iskander Makhmudov.

Here [2] is the for-sale notice. With offices in London, New Jersey, Bermuda, and Beijing, Freestream describes itself as a broker for corporate and private jet aircraft. It claims “expertise, commitment to integrity, and vast experience [to] provide our clientele the exclusive opportunity to experience a seamless transaction in a timely manner. Principals the world over continue to find their experience with Freestream advantageous and beneficial.”

The sale details identify the aircraft as having been purchased new in 2007; to have been fitted out to an interior design plan by Andrew Winch; and to have flown more than 1,616 hours (as of May 2012) with 420 separate landings. A source with details of Deripaska’s flight itineraries has identified him as the beneficial owner and operator of the aircraft through a company registered in a haven. It isn’t known whether the operating and financing costs have been charged to Rusal; there is no reference to aircraft in the company reports. Insiders at the company report that such costs are being cut, even when that curtails the chief executive’s freedom of movement. Not that Deripaska’s travel schedule has been much curtailed this month. A partial log shows his Boeing in New York on September 28; Moscow October 2; Krasnodar October 5; Dubrovnik, Croatia, October 7; Baden Baden, Germany, October 11; Athens, Greece, and Bulgaria, October 14; and between St. Petersburg and Moscow on the evening of October 24.

Shore spotters took photographs of Deripaska’s motor yacht in the harbour at Dubrovnik on October 2 [3], so it seems he summoned the Boeing to deliver, then collect him a few days later. Other sources identify Suleiman Kerimov’s aircraft (a 1999 Boeing) in Krasnodar with Deripaska’s on October 5 and 6.

The Freestream office in London identifies the broker handling the Boeing sale as Alireza Ittihadieh (right), and said that he would clarify details of the seller of the Boeing on request. He responded that “contractually we are bound by confidentiality with respect to all our For Sale listings. We as a company can not and will not confirm or deny the ownership of an aircraft.” He is less shy about displaying the sale tag — $75.95 million. That’s not enough to meet a single instalment of the settlement Deripaska has agreed with former shareholder, Mikhail Chernoy (Michael Cherney).

According to reports in Seattle, where Boeing builds its aircraft, the current list price of a Boeing 737-800 for commercial passenger operations starts at $72.5 million. But the appraisal value, reported by Boeing for borrowing and security purposes to the US Securities and Exchange Commission for aircraft operated since 2009 is just $48.4 million [4]. Allowing for longer, if less intensive usage of his aircraft, the larger fuel capacity and longer range, and also the limited 18-passenger fit-out, the Boeing disclosure suggests that Deripaska will be fortunate to get half the asking price. According to Rusal’s financial report for 2011, Deripaska’s salary, including a share allocation, was less than $9 million. Not quite enough to run a Boeing jet and his other properties. Last year’s compensation compares with Deripaska’s salary of $69.8 million, plus shares worth $61.3 million, reported by the company auditors in 2010.