OREANDA-NEWS. June 05, 2009. Event: Nord, an Aeroflot subsidiary that accounts for approximately 10% of the Group's consolidated turnover, faces regulatory restrictions on flying abroad due to unsatisfactory financial and technical conditions, domestic media wired on 5 June.  The company has until 1 September to resolve these problems, or it risks losing its license.

View: We expect this news to trigger a negative market reaction. However, we see no fundamental change for Aeroflot's outlook going forward, mostly due to its ability to settle the outstanding problems by the 1 September deadline. Moreover, Aeroflot-Nord has an extremely low margin, providing only a minor contribution to the Group's overall cash flow.