Flagship carrier Aeroflot is in talks to buy Georgia's national carrier, Air Zena, in an effort to expand into the CIS market, a company official said Sunday.

"We confirm that we are in talks, but this is a very preliminary stage and it is too early to talk about results," Lev Koshlyakov, deputy general director of Aeroflot, said by telephone Sunday.

Aeroflot last week signed a preliminary agreement to join the Air France-led SkyTeam airline alliance, a deal that could take a year to be finalized.

Koshlyakov added that there have been no negotiations with other CIS airlines on possible purchases.

Air Zena was not available for comment over the weekend, but company spokesman Tea Kakabadze confirmed to RIA Novosti that talks with Aeroflot were under way.

Air Zena became Georgia's national carrier after gobbling up bankrupt Georgian Airlines in 1999.

The company itself started off in 1994 as a charter carrier and is completely private. It operates three Boeing 737-500 and two Antonov 2 aircraft on routes connecting Tbilisi with Moscow, Prague, Paris, Athens, Tel Aviv, Frankfurt, Amsterdam, Vienna and Kiev.

Details of the airline's financial situation were not immediately available, and it was not clear how much Aeroflot was prepared to pay for the airline.

A source in Aeroflot said Sunday that "the market volume of the company is not very big. From the point of view of consolidation, Air Zena is not the most interesting asset, but at the same time not the most harmful."

If Aeroflot buys up Air Zena, it will follow in the footsteps of No. 2 carrier Sibir, which in 2002 acquired Armenia's Armavia airline.

Sibir has used Armavia not only to expand its network, but also to import Airbus 320 planes duty-free and to gain experience operating them on the CIS market.

Sibir has already imported four such craft and is only required to pay a small registration fee in Armenia. However, the aircraft cannot be used on the routes of Sibir proper.

"Sibir's experience with importing jets through Armavia could be interesting to Aeroflot," the source said.

He lamented government restrictions on using imported craft -- Aeroflot is allowed to operate only 27 foreign jets in its fleet of 78 -- but added that flying planes under another flag "is still better than nothing."

News of the talks broke Friday during a visit to Tbilisi by Economic Development and Trade Minister German Gref.

He was attending a two-day bilateral business forum accompanied by some 100 Russian businessmen, including executives like Aeroflot's Valery Okulov, Access Industries-Renova's Viktor Vekselberg, AFK Sistema's Vladimir Yevtushenkov, Itera's Valery Otchertsov and United Heavy Machinery's Kakha Bendukidze.

Gref told the gathering, which was also attended by Georgian President Mikheil Saakashvili, that "Russia considers Georgia a close political partner and a priority country for developing cooperation."

(The Moscow Times 31.v.04)