This report summarizes opportunities in Bulgaria's markets for aircraft, aircraft parts and airport construction. Provided financing can be found, opportunities may exist to sell aircraft to Bulgaria s Balkan Bulgarian Airlines, the international flag carrier, and to the regional carrier Hemus Air. Balkan also requires parts to maintain its five leased Boeing aircraft. In addition, opportunities exist for participation in the reconstruction and management of Bulgaria s international airports in Sofia, Bourgas and Varna and the new air traffic control center under construction in Sofia. Interested U.S. companies should contact CS Sofia and the project entities and other relevant contacts listed in this report.

A. Aircraft Sales

For the next several years, the most significant market opportunity may be the sale of commercial passenger jets, such as Boeing 737-500s, to Balkan Bulgarian airlines, the national state-owned flag carrier. Balkan currently leases five Boeing commercial passenger jets, three B737-500's and two B767-200's, and owns a number of older Russian-built Tupolev jets, Antonov jet-props and Yakovlev jet-prop and propeller passenger planes. The leases for the two B767's will expire in 1999 and the leases for the B737's will expire within the next two years. Balkan would like to reconfigure its fleet of non-Russian aircraft fleet to include four aircraft of 160 seats, one or two with 210 seats and one or more with 70 seats.

However, Balkan is currently in severe financial straits, and needs necessary working capital of $5 million to continue operations in 1999. Balkan would also require at least $50 million plus long-term financing to purchase a new fleet of aircraft. The Bulgarian Privatization Agency is currently seeking private investors for a 75 percent share of Balkan under Bulgaria s privatization program. The main obstacle toward finding an investor is the need to cover the existing substantial debts of Balkan.

Sales possibilities to Hemus Air, a regional state-owned carrier based in Sofia that currently operates Yakovlev, Laz and Tupolev passenger planes, also may exist.

B. Aircraft Parts

There may be an opportunity to supply aircraft engine parts to Balkan. Balkan, however prefers to service and repair its fleet of leased Boeings outside Bulgaria to avoid taxes and duties.

C. Airport Infrastructure and Related Facilities

Bulgaria has three international airports in Sofia, Bourgas and Varna and seven regional airports in Plovdiv, Rousse, and five other cities. All are owned by the central government but are required to operate independently on commercial principles. The airport infrastructures are old and are in need of massive modernization.

Major opportunities for U.S. firms to participate in the modernization of Bulgaria s airports may exist for consulting and engineering firms, building materials, airport systems and equipment suppliers, airport management service firms, computer hardware suppliers and software developers and suppliers.

1. Sofia Airport Expansion

Sofia Airport will be modernized with a completely new passenge terminal, longer runway, and expanded taxiways. This project is starting to come into focus as financing has become available and a master plan has been prepared.

Current reconstruction plans are for the new terminal to have a capacity of 2.5 million passengers/year (2,500 passengers/hour at peak hours), have a floor area of 26,000 square meters, new aprons covering 38,000 square meters, and road access and parking lots covering 18,000 square meters.

The current single 2,800-meter runway will be extended 540 meters to the east to a total length of 3,340 meters and completely resurfaced with specifications of 45 x 3600 cm and PCN 90, together with additional taxiways covering 20,000 square meters.

In March 1998 the Government of Bulgaria approved a financial agreement with the European Investment Bank (EIB) for a loan of 123 million ECU for development planning of the expansion of Sofia airport, design and construction of a new passenger terminal building and extension of the existing runway. Technical assistance to be provided by the financial agreement includes completion of the airport master plan, planning and supervision of the project implementation, and operation and financial management of the airport. In August 1998, the Government of Bulgaria approved a $40 million loan from the Kuwait Development Fund for additional financing for extension of the runway, construction of a new parallel runway and additional taxiways.

2. Sofia Airport Cargo Terminal Construction

In September 1998 a consortium led by the large Bulgarian construction company Glavbolgarstroy and Siemens that won a tender under the previous Socialist government to build a new cargo terminal failed to obtain the necessary financing, and a new $200 million tender is expected to be announced in January 1999. The new cargo terminal is intended to be able to handle 10,000 - 15,000 tons of tons of air cargo annually.

3. Bourgas Airport Modernization

A prefeasibility study for modernization of Bourgas Airport has been performed by the British firm Mott MacDonald. Bourgas Airport facilities will be upgraded, including a new cargo terminal and modernization of the runway areas. This project will have an estimated value of $60 million.

4. Varna Airport Modernization

The Varna Airport master plan provides for extension of the runway, a new cargo terminal, modernization and extension of the international departure lounges, construction of safety side strips for taxiways, and construction of an apron for cargo aircraft. This project will have an estimated value of $100 million.

5. National Air Traffic Service Center Phase III

In 1997 the Government of Bulgaria ratified a financial agreement with the European Investment Bank for a loan of $60 million ECU for construction of a new air traffic control tower in Sofia under the authority of the Air Traffic Services Authority. The National Air Traffic Service Center will control all air traffic over Bulgarian air space, both civilian and military. The tender has been split into three phases: Phase One consisted of construction of the new tower, which was completed in December 1997. Phase Two consists of additional construction and installation of basic utilities and the winning bid will be announced in January 1999. The third phase with an estimated value of 30 million ECU will consist of procurement of radar and navigation aid equipment for the needs of the civil and military authorities which will operate the new air traffic control center.

More reports from Factbook

Bulgaria
Market studies	Economic reports and analyses
Autoparts Market	Economic Trends & Outlook - 2001
Autoparts Market Summary 2001	Business Travel
Aviation Market	Internet Opportunities
Car Market - 2001	Contacts
Building Materials Market - 2001	Investment Climate - 2001
Cellphone Market	Leading Sectors- 2001
Computer Hardware Market -2001	Political Environment - 2001
E-Commerce -2001	Trade Financing - 2001
Franchising Market	Trade Regulations
Internet Market Access	Trade Statistics
Internet End User Market	FDI & Convergence Indicators - 2001
Internet Services Market
Internet Software Market
Software Market
Tourism Market -2001
Value Added Telecom Market -2001

Factbook.net

D. Key Contacts

The following are key Bulgarian contacts in the aviation sector:

Privatization Agency 29 Aksakov Street Sofia 1000, Bulgaria Phone: (359-2) 987-7579; 861-3240 Fax: (359-2) 981-1307 e-mail: BGPRIV@MBOX.DIGSYS.BG website: http://www.privatization.bg Contact: Mr. Zahari Zheliazkov, Executive Director CS Sofia comment: This is the agency authorized to negotiate and implement privatization of Bulgarian state-owned enterprises.

E. Assistance from Commercial Service Sofia

Commercial Service Sofia supports U.S. exporters of goods and services interested in doing business in Bulgaria. U.S. companies interested in receiving International Market Insight reports and announcements by e-mail should contact Commercial Service Sofia at osofia@cs.doc.gov with identifying company information and market sector interest to be placed on one of our e-mail mailing lists. For further information on Bulgaria s markets, companies should read the Country Commercial Guide for Bulgaria, available at http://www.mac.doc.gov/eebic/countryr/bulgaria. For further information on CS Sofia services for U.S. exporters interested in doing business with Bulgarian companies including the Gold Key Service, Agent Distributor Service, and International Company Profile service, U.S. companies should check the CS Sofia webpage at http://www.ita.doc.gov/uscs/bulgaria. CS Sofia can be contacted directly as follows:

Phone: (359 2) 963 4062 (359 2) 963 2014 Fax: (359 2) 980 6850 e-mail: osofia@cs.doc.gov

U.S. mailing address:

Commercial Service Sofia U.S. Embassy Sofia U.S. Department of State Washington, DC 20521 5740

Address for courier service packages or mail from outside the United States:

Commercial Service Sofia U.S. Embassy Sofia 1 Saborna St. Sofia 1000 Bulgaria

Source: U. S. Department of Commerce - National Trade Data Bank, November 3, 2000