OREANDA-NEWS. October 15, 2009. Aeroflot will be allowed to import ten A-330 aircraft, purchased under an operating lease, without paying import duty, according to a report in Vedomosti. The deal came to fruition once the airline and SCAC (the producer of the SSJ-100 jets) agreed to waive penalties for delay in aircraft deliveries, reported the press-centre of OTKRITIE FC.

View: Since the company will save some money on these transactions, we take a positive stance on this news. Although the import duty is 20% for airplanes and the price of a new A-330 is US 180m - US 200m, we think that the amount of payments for each plane for import duty purposes is much lower than 10xUS200mx20%.

The penalty for each delay in deliveries amounts to US 1.5m, so we can assume that the maximum amount of savings will be roughly US 45m (for 30 SSJ jets). Given that the company is likely to post a net margin close to 0 in 2009, tax reductions will help improve Aeroflot's financials.

Valuation & Action: The company is fairly valued compared to foreign airlines with a 2009E EV/EBITDA of 8.2x. However, in October Aeroflot will release its 1H09 IFRS results which could trigger movement in the stock price.