NUMBER OF ARMAVIA EMPLOYEES TO BE REDUCED FROM CURRENT 490 TO 400

Noyan Tapan News Agency, Armenia
Nov 7 2006

YEREVAN, NOVEMBER 7, NOYAN TAPAN. Work on technical, personnel and
other improvement is underway at the airline Armavia after the crash
of A-320 plane on May 3 near Sochi. Armavia’s owner Mikhail Baghdasarov
said on Novemeber 7 that the company has overcome the crisis.

Responding to NT correspondent’s question, he noted that it is planned
to reduce the number of the airline’s employees from current 490
to 400. "There are many people in Armavia, who, in addition to not
working, also spread rumors that the company is allegedly being sold,"
M. Baghdasarov said.

In his words, he will develop the Grand insurance company founded
by him because "we are afraid of trusting others to insure the
aviation." According to him, in their pursuit of profits, some
insurance companies do not reinsure their risks in "strong companies"
and "if there is something, problems will arise." He said that
insurance companies keep part the sum envisaged by the insurance
contract and give the remaining sum to the reinsurer. Reinsurance
is often done in the amount of 60-80% of the value of the contract
subject. If the price of an aerobus makes 30 million dollars, the
insurer "gets quite a large sum from reinsurance, while we are left
0.1-0.5%".

In the words of M. Baghdasarov, after the May 3 tragedy the financial
"losses were minimal" thanks to the fact that all risks related to
Armavia were reinsured.