- UIA Cuts Staff, Jets and Long Haul Flights
- Kyiv Airports Predict Slow Recovery
- Survey: Which Countries Will Open First For Ukraine Flights
- Train Service Normalizes Monday in Eastern, Southern Ukraine
- River Freight Tonnage To Triple by 2025
First Speed Cameras Start Snapping Photos Monday
Ukrainian International Airlines is cutting 35% of its staff, mothballing 60% of its fleet, cutting business class seats, and planning to delay resumption of long haul flights until next spring, Yevhenii Dykhne, UIA CEO, said in a statement. UIA will let go 900 employees and only fly 14 planes of its fleet of 34 aircraft. During the second half of this year, UIA hopes to fly 1 million passengers, one quarter of the volume of the second half of 2019.
Without offering details about such long haul destinations as New York and Toronto, Dykhne said only: “Long-haul operations may be resumed…in or about April 2021.” The first phase of reopening will be to restore domestic flights and flights to the EU and Turkey. Ukraine shut down all scheduled air traffic on March 17. Since then, UIA has conducted several ‘evacuation’ flights, bringing Ukrainians home and 45 cargo flights. Flights are to restart after June 15. Dykhne has estimated that the three month shutdown will cost the airline, Ukraine’s flag carrier, $60 million.
Kyiv Sikorsky airport hopes to return to 30% of normal passenger traffic by the end of this year, Oleh Levchenko, airport manager tells Interfax Ukraine. This would mean handling 2,000 passengers a day, the level of 2012.
Kyiv Boryspil airport received $1.85 million in revenue in April, about 13% the level of April 2019. The airport reports it is losing about $12 million a month.
The first countries to re-open regular flights with Ukraine may be the ones that did not ban international flights during the pandemic: Britain, Belarus, the Czech Republic, Germany, Ireland, and the Netherlands. A second group, according to a survey by UkSATSE, the air traffic control agency, plan to end their flight restrictions by Monday: Austria, Azerbaijan, Georgia, Greece, Romania and Slovakia. Countries heavily dependent on summer tourism are expected to open to flights by mid-June: Bulgaria, Cyprus, Egypt, Israel, Italy, Turkey, and Portugal.
Acting on the Ukraine government’s promise to restart international flights by June15, several airlines have announced resumption of flights to Ukraine: Air Baltic to Riga on June 15; Wizz Air on June 16; Austrian Airlines Vienna-Kyiv on June 23; Belavia to Minsk late June Ryanair on July 1; Yanair to Georgia on July 1, and Air Astana to Kazakhstan on July 1.
With Ukrainians restless to travel again, Infrastructure Minister Vladyslav Krikliy posted a video on Facebook, saying: “Work is ongoing so that our citizens can soon travel and fly safely in Ukraine and abroad. Together with the Foreign Ministry, we are negotiating with various countries on the resumption of regular passenger air traffic.”
Even though Ukrainians have been cooped up for two months, spending on foreign travel will drop in half this year, to $4.5 billion, Dmitry Sologub, a deputy chairman of the National Bank of Ukraine, predicts in an interview with Liga.net. He said many Ukrainians have depleted their savings. Insecurity about the future will constrain spending. He added: “But this does not mean that people will stop consuming at all. Take at least the effect that people stayed at home for two months. Now they will have a subconscious desire to return to their former lives: go to a restaurant, go on vacation.”
Ukrzaliznytsia will start running 42 long distance trains, largely in southern and eastern Ukraine, areas with the lowest coronavirus infection rates. From Kyiv, trains will run on 17 routes, reconnecting the capital with such cities as Odesa, Kharkiv and Dnipro. Ivan Yuryk, acting CEO of the railroad, reports that 97% of the 21,000 tickets sold on the first day were sold online. In addition, 214 suburban ‘elektrichkas’ will start running, largely in the south and the east: Lviv Railway – 20 trains; Donetsk Railway – 38 trains; Odesa Railway – 44; and Southern (Kharkiv) Railway – 112.
Deutsche Bahn has restored 95% of its domestic train service, reports Railways of the world. Since last Monday, international trains have been running to Austria, Switzerland and the Czech Republic. By mid-June, trains should be running to Poland.
Cargo shipped down the Dnipro River could nearly triple, to 30 million tons in 2025, if the Rada passes the “Inland Water Transport” bill, says Infrastructure Minister Krikliy. Revival of the Dnipro as a working river could generate $500 million a year – in greater economic activity, shipbuilding, tax revenues, and reduced wear and tear on roads to the Black Sea ports, Krikliy said Tuesday at a press conference. One tug pulling two river barges can move 1 million tons, taking 250 trucks off the roads, he said.
The EU “very warmly supports” the bill, EU Ambassador Matti Maasikas, said at the online press conference. Comparing current shipping volumes to the late Soviet era, he said Ukraine only uses 10% of the potential of the river’s 1000 km inside the country. “The Ukrainian river network has the potential to become a backbone of a modernized Ukrainian transport system,” he said. “However, reforms are required to do this, and the adoption of a new law would be a first step.” A Dutch team of waterway experts is drawing up a development blueprint in a 3-year €1.9 million project, Assistance for Dnipro Transport Development.
The full length of the Dnipro opens Monday to river traffic with the reopening of the shipping lock at Kaniv hydroelectric dam, 150 km south of Kyiv. Minister Krikliy visited the 50-year old lock which had been overhauled this spring by Ukrvodshlyakh, the state waterways company.
Ukraine’s first 50 speed cameras started working Monday morning – 40 in Kyiv city and region and 10 in Lviv city and region. Later this year, the cameras will start recording other violations, such as running red lights or parking on sidewalks. By the end of this year, another 220 cameras are to be purchased for monitoring areas with high accident rates. By EU and US standards, fines are mild: $9.50 for going 20 to 50 kph over the speed limit; and $19 for going 50 kph or more over the limit. According to the Internal Affairs Ministry, 175,216 people have been killed in traffic accidents since Independence. Speeding is a factor in 40% of these fatalities.
- US to Supply Half of Ukraine’s Gas Imports
- US Threatens More Sanctions on Nord Stream 2
- Survey: Corona Curbs Stifle Small Businesses.
- Kyiv Reconnects with Eastern and Southern Ukraine
- Kyiv Shopping Centers Reopen Saturday
Ukraine’s Cabinet of Ministers agreed to import enough US natural gas to cover half of Ukraine’s annual import needs. Under the memorandum signed with Louisiana Natural Gas Exports Inc, Ukraine would import “at least” 5.5 billion cubic meters of gas via Poland. On an average year, Ukraine imports about 10 bcm. The gas would arrive as liquefied natural gas at Poland’s sole LNG landing terminal, at Świnoujście, on the Baltic. The EU is funding a major expansion of the terminal.
The memorandum calls for official US and EU funding to triple the pipeline capacity between southeast Poland’s gas hub at Hermanowice and Lviv region’s massive gas storage reservoir and pipeline hub at Bilche-Volytsya. Yuriy Vitrenko, Naftogaz’s outgoing business development director, tells the UBN that Poland is waiting for the EU to pay for expanding the interconnector.
Ukraine’s gas import price would be pegged to prices at Louisiana’s Henry Hub. Konstantyn Chyzyk, a deputy Energy Minister of Ukraine, wrote on Facebook: “This will strengthen our energy security and independence, as well as reduce Russia’s influence, not only on Ukraine, but on Europe.” Chyzyk, who worked on stepping stone agreements in December and in March, predicts the Poland-Ukraine pipeline connection will be ready in 2023.
Poland exported 690 million cubic meters of gas to Ukraine in the first quarter, Jerzy Kwiecinski, CEO of PGNiG, Poland’s state oil and gas company, tells Polish Radio. He predicts Poland will increase exports in the 2020s, drawing on LNG arriving at Świnoujście and Norwegian gas arriving in 2022 through the Baltic Pipe gas line.
A gas glut forced Russia’s Gazprom to stop shipping gas across Poland on the Yamal-Europe pipeline, Bloomberg reports in a story headlined: “Russian Gas Flows to Europe Plunge After Prices Collapse.” Prices dropped to $41/1,000 cubic meters, near the transit costs for Gazprom from its Yamal fields. Qatar says it has no plans to cut its LNG shipments to Europe. Under the ‘ship or pay’ clause in the new Gazprom contract with Ukraine, Gazprom has to pay for contracted pipeline volumes, whether they use them or not.
In the EU, gas storage reservoirs are 71% full. In Ukraine, which has the largest reservoirs in Eastern Europe, the underground caverns are 57% full. Ukraine has 17.6 bcm in storage, 60% more than this time last year.
With two Russian pipe laying ships docked in a German Baltic port and preparing to complete the last 6% of the Nord Stream 2 Russia-Germany gas pipeline by December, Richard Grenell the outgoing US Ambassador to Germany warns: “Further [US] sanctions meet non-partisan approval…Despite the election campaign, legislation could go ahead quickly.” Germany’s business newspaper, Handelsblatt, predicts a showdown between Washington and Berlin over the gas line. One aide to Economy Minister Peter Altmaier is quoted saying: “It is not the time to turn the escalation spiral and threaten further extraterritorial sanctions that are contrary to international law.”
The eurozone economy may shrink this year by 8-12% – twice the drop of the 2008 financial crisis, says Christine Lagarde, president of the European Central Bank. The IMF predicts these GDP declines: Poland – 4.6%; Russia – 5.5%; Belarus – 6%; Britain 6.5%; Germany – 7%; Ukraine – 7.7%; Spain -8%; and Italy – 9.1%.
Ukraine’s central bank is downgrading its forecast of GDP shrinkage to 6-7%, from 5%, Dmytro Sologub, deputy governor of the National Bank of Ukraine tells Liga.net. “Based on the data on the decline in the first quarter, industrial production and transport in April, I think the decline may be more severe than expected,” he says in a lengthy interview. “As for transport, which was actually banned – we see almost minus 100% there. The situation is a little better in the restaurant business.”
The coronavirus lockdown is depriving one third of small businesses of more than half of their income, according to a European Business Association poll completed of 111 small businesses. Of the group, 44% lost up to half of their income and 7% are considering closing. One third cut staff and 59% kept staff levels unchanged. On salaries, 29% cut wages and 19% put employees on unpaid leave. After the two month lockdown, 60% of entrepreneurs are considering a full or partial switch to remote work mode.
Compared to big companies, “small entrepreneurs had a limited safety margin” says Olena Ayrault, who has surveyed both groups for the EBA’s Unlimit Ukraine Project. “At the same time, we see that small businesses are more flexible. While large companies are considering only a partial transition to online mode, SMEs are ready for total digitalization.”
The Finance Ministry sold $37 million in local currency treasury bonds Tuesday – a tiny amount compared to $791 million raised last week at the weekly auction. For 3-month bonds, the weighted average interest rate fell to 10.19%, from 10.50% one week earlier. For 6-month bonds, the weighted interest rate fell to 10.33%, from 10.78% one week earlier.
Train and bus travel opened up Monday from Kyiv to southern and eastern Ukraine. Ukrzaliznytsia is selling tickets for night trains from Kyiv to these terminus points: Kharkiv, Kremenchuk, Mariupol, Konstantinivka (Donetsk), Lysychansk (Luhansk), and Novooleksiivka, the last stop in Kherson before Crimea. In addition, UZ is resuming night trains between Odesa and Kharkiv and Odesa and Dnipro.
Also on Monday, Autolux buses started running again from Kyiv to Odesa, Kharkiv, Dnipro, Kherson, Poltava, Mykolaiv, Zaporozhia and other cities with low levels of coronavirus. As with trains tickets can be bought online and passengers must wear masks.
Shopping centers opened in Kyiv on Saturday – but without the entertainment centers and food courts, Mayor Klitschko told reporters in an online briefing. He also said the lockdown has cost Kyiv’s hotels, restaurants and tour operators $1 billion in lost revenues. He hopes resumption of train service and the planned June 15 resumption of air service will save some of the city’s summer tourist season. Last Monday and Tuesday, the Kyiv Metro recorded a total of 773,000 rides – about one quarter the normal level for two weekdays.
- Exports to China Double
- Despite Corona Curbs, Port Cargo Was Up 12.5% Through April
- With Investment Down, IT and Irrigation Look Promising
- Ryanair Posts July Ukraine Flight Schedule
Ukraine’s exports to China doubled during the first quarter, consolidating China’s position as Ukraine’s top trading partner. Two-way trade totaled almost $3.2 billion for the January-March period, reports Ukraine’s State Statistics Service. Exports to China surged to $1.25 billion, while imports from China fell by 5%, to $1.9 billion.
Poland was in second place, with two-way trade virtually static at $1.8 billion. Overall EU trade with Ukraine totaled $10.6 billion. Ukraine’s trade deficit with the EU increased to $1 billion as exports fell by 9%, to $4.8 billion. The EU accounts for 41% of Ukraine’s foreign trade.
Lower oil and gas prices almost zeroed out Ukraine’s global trade deficit in the first quarter. The deficit in goods and services fell to $9 million, far below the $438 million deficit recorded during the same period last year. During Q1 2020, imports fell by 3% to $14.69 billion. Exports fell by 0.3, to $14.68 billion.
During the first four months of this year, including the full quarantine month of April, Ukraine’s ports handled 12.5% more cargo than during the same period last year. Grain was up 5%, to 18.7 million tons. Ore was up 30%, to 13.8 million tons. The Sea Ports Authority reports that coal doubled, to 2.5 million tones, and crude oil increased five-fold, to 800,000 tons.
Ukraine’s largest port, Pivdennyi, grew the fastest – handling 21 million tons, a 33% jump over last year. Mykolaiv saw a 4% drop. Chornomorsk and Odesa saw minor growth. These four ports handled 87% of Ukraine’s sea trade. Mariupol, Ukraine’s main port on the contested Sea of Azov, saw a 33% increase in cargo, to 2.2 million tons.
Container handling was up 17%, to 357,700 units. Partly due to good railheads, the Odesa region ports handled 99% of Ukraine’s container trade: Odesa – 61%; Pivdennyi – 24%; and Chornomorsk – 15%. But growth was fastest at the region’s two most modern ports, with Pivdennyi registering 30% growth and Chornomorsk registering 28% growth.
Ukraine will continue exporting wheat through June, deputy economy minister Taras Vysotskiy told Reuters. Last weekend, Ukraine used up the 20.2 million ton wheat export quota agreed last year for the July 2019/June 2020 season, reports APK-Inform agriculture consultancy.
Capital investments in Ukraine shrank by 29% in the first quarter, compared to January-March 2019, reports the State Statistics Service. The $2.85 billion in new investments reflects drops in construction, real estate and farming. Telecommunication investment was up 17%.
IT innovative clusters and farm irrigation are two sectors that will offer investors strong growth in the 2020s, Economy Minister Ihor Petrashko said Tuesday in response to a question by UBN at an Atlantic Council webinar on Ukraine’s economy. Moving beyond outsourcing, Ukrainian IT specialists can form clusters to create world beating products, he said.
As low rainfall becomes the new normal in southern Ukraine, investment in irrigation will give big payoffs by boosting yields in some of the nation’s “best quality land,” he said. Today, irrigation only covers 300,000 hectares, barely one tenth of the 2.5 million hectares irrigated in Soviet Ukraine, which included Crimea. “The state sees this as a priority for development which will create an enormous amount of jobs in the south,” he said. Experts propose holding regional referendums on foreign land ownership. Under the current farmland rental system, foreign companies are reluctant to make major investments in irrigation in Ukraine.
With the coronavirus pandemic and Washington’s emerging commercial Cold War with China, Ukraine is well positioned for companies seeking to diversify their supply chains in the 2020s. Minister Petrashko noted concern about “whether the EU and US should have such a reliance on certain Asian countries,” and said: “We will do everything possible to create the best conditions possible to be more connected to the supply chains in the EU.”
The 10 most promising countries for Ukrainian exporters in the 2020s are: Brazil, Canada, Chile, China, Ethiopia, India, Kazakhstan, Qatar, Uzbekistan and the United Arab Emirates. The Foreign Ministry drew up the list in conjunction with the Exporters and Investors Council. Chile and Ethiopia do not have embassies in Kyiv. Ukraine does not have an embassy in Chile, the most affluent country on South America’s Pacific coast and home to a Ukrainian diaspora of 1,000 people.
Promotion of Ukrainian exports is now a key job for Ukrainian diplomats, Prime Minister Shmygal says. “We will focus our diplomats on promoting Ukrainian exports” and attracting investment to Ukraine, Shmygal tells Interfax-Ukraine.
Ireland plans to open its embassy in Kyiv by the end of this year, Foreign Minister Dmytro Kuleba reports after a telephone conversation with Simon Coveney, Ireland’s Minister for Foreign Affairs and Trade. “We also expect the arrival of an Irish business mission in Ukraine by the end of the year,” Kuleba said. “We need to quickly and efficiently develop trade and attract Irish investment in Ukraine.”
Dublin-based Ryanair plans to resume flights to Ukraine in early July, flying to half of its 47 pre-crisis routes, reports avianews.com. In October, 17 routes will be re-started for the winter season. Six routes will be abandoned. With flights from Kyiv Boryspil, Lviv, Kharkiv and Odesa, Ryanair flies largely to cities in Germany and Poland, destinations for Ukrainian workers in the EU.
- Ukraine Whacks China With Steel Pipe
- Californians Buy Odesa’s Football Stadium
- IKEA Can’t Cope With Ukrainian Demand
- Poland, Germany Beckon Ukrainian Workers
- Unemployment Jumps
- With No Flights, Kyiv Sikorsky Mulls Bankruptcy
In a rare rebuff to Ukraine’s largest trading partner, Ukraine is slapping a 51.52% anti-dumping duty on imports of seamless pipes from China. The move comes in response to complaints by Interpipe, Ukraine’s largest pipe and railway wheel producer.
Concorde Capital’s Dmytro Khoroshun writes: “Interpipe’s gains from this decision will be modest…Nevertheless, we view this victory as a matter of principle for Interpipe and for Ukraine. This is because Interpipe complained in the past that China not only dumped the sales of its pipes in Ukraine, but also de facto closed its domestic market for Ukrainian pipes by implicit government directives within the country’s centrally planned system.”
Chinese car sales in Ukraine increased by one quarter over the first four months of the year, totaling 945 vehicles, reports Xinhua, citing Ukravtoprom figures. In April, new car sales in Ukraine dropped 46%. However, sales of China’s Chery car were down only 18%.
A California investment company with Ukrainian roots is buying Odesa’s Chornomorets football stadium. Allrise Capital, based in Irvine, near Los Angeles has agreed to pay $5 million for the stadium which includes an office center, fitness center, hotel and restaurants. The CEO of Allrise is Ruslan Zinurov and the executive director is Mykhailo Trubchyk. It was the 17th attempt by the State Deposit Guarantee Fund to sell the 10-year-old, 34,000-seat stadium. Put up for auction as part of the liquidation of Imexbank, the stadium first had an asking price of $40 million. The stadium failed to win bidders due to unattractive long term leases and outsider control of the electricity supply. Last September, The Wall Street Journal chronicled the sales efforts by an Oklahoma City firm, First Financial Network.
Swamped by demand, IKEA, the Swedish-Dutch home furnishings retailer, is suspending its Ukraine website – 10 days after launch. “To meet the demand and continue to meet IKEA’s high standards and customer expectations, we decided to process and deliver already registered orders and temporarily limit the ability to process new ones,” IKEA tells Interfax-Ukraine. “We are doing everything possible to restore the website as soon as possible.”
Worker remittances will drop 17% this year, to $10 billion, calculates the National Bank of Ukraine. Despite the $2 billion drop, labor will remain Ukraine’s second largest export, after food. The World Bank estimates that Ukrainian workers sent home $15 billion in 2019 – the equivalent of 10% of the nation’s GDP.
During the first quarter, remittances were up 7% y-o-y to almost $3 billion, reports the central bank. In mid-March, the government encouraged Ukrainians working abroad to come home, warning that Ukraine’s borders were closing. Ukrainians send into Ukraine almost 20 times the volume of money they send out – $154 million in Q1, the bank reports on its Facebook page.
Due to the coronavirus scare, at least 12.5% of the estimated 1 million Ukrainians working in Poland came home, Polish experts estimated at a recent Polish-Ukrainian webinar: “Migration and Remittances.” As a result, Ukrainian labor migrants may transfer 30% less money from Poland to Ukraine this year, predicted Lukasz Kozlowski, chief economist of the Polish Federation of Entrepreneurs. Poland is the primary destination for Ukrainian workers, with many going for informal jobs that last less than the 90-day visa free limit for Ukrainian tourists.
Polish companies are desperate for Ukrainian workers, Yevhen Kyrychenko, CEO of Gremi Personal, a Gdansk-based employment agency, told Reuters in a story headlined: “Ukrainian workers start returning to Poland as lockdown eases.” Kyrychenko organized a Kyiv Boryspil-Warsaw charter flight. he said: “We currently work with over 120 companies, every day we have several new requests from companies that need workers.”
With only half the seasonal farm workers it needs, Germany is stretching the deadline for foreign workers to enter the country, Deutsche Welle’s Ukrainian service reports, citing a German Agriculture Ministry statement. With German farms needing another 40,000 workers, Germany is moving the arrival deadline to June 15.
Long term work contracts, health insurance, and employer-paid charter flights should flow from Poland and Germany’s new found appreciation for Ukrainian workers, argues the Zelenskiy government. After initially discouraging Ukrainians from returning to the EU to work, the government now takes a laissez faire approach. “We are absolutely liberal in this regard,” Foreign Minister Dmytro Kuleba told RBC-Ukraine last week. Much depends on Ukraine’s affluent EU neighbors – Poland, Slovakia and Hungary – opening their airports and land borders to Ukrainians. From Kyiv’s side, he said: “No one is going to keep Ukrainians under lock and key. We have no such ideas.”
The number of Ukraine’s officially unemployed was up 64% last week y-o-y, to 501,000, reports the State Employment Service. In contrast, the number of vacancies was down 55% to 51,000. Since a large portion of Ukrainians work off the books, the numbers are largely useful as trend indicators.
Last Monday’s reopening of the Kyiv Metro was deemed successful with turnout light, riders spaced apart and wearing masks. Monday will see the next step: opening kindergartens, gyms, beaches and cemeteries. Mayor Klitschko says surface mass transit is near normal, including 770 ‘marshrutkas’ circulating with drivers wearing masks. Due to continued traffic jams, large trucks remain banned from entering the city during rush hours: 7-10 am and 5-8 pm.
Kyiv Sikorsky airport revenues are down by 92%, 2,000 employees are on unpaid leave for two months, and the airport managing company, Master-Avia LLC, is mulling bankruptcy, Oleh Levchenko, the company CEO, tells LB.ua. Wizz Air, responsible for about 80% of the flights, had planned to resume flights last weekend. But Infrastructure Minister Vladyslav Krikliy said he will only consider renewing international flights to Ukraine after June 15, stretching the flight suspension into three months. In 2010, to help Ukraine prepare for the Euro 2012 football championship, Master-Avia signed a 49-year management lease for Kyiv’s right bank airport. Since then, it invested $78 million to rebuild and expand the single runway airport. Passenger traffic grew: from 29,000 in 2010, to 2.6 million last year.
The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.
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