Alstom has announced that it will suspend all future business investment in Russia and “obviously will comply with all applicable sanctions and laws” by deciding to suspend all shipments to Russia.

Business investments in Russia

Alstom owns a 20% stake in Transmashholding (TMH), a Russian supplier of locomotives and railway equipment primarily serving the local market, as an equity investment, informs Railway Supply magazine citing railwaypro.

There was no material business or operational communication between Alstom and TMH, according to a press release from the French manufacturer.

The book value will be reassessed as part of the closing of accounts for the 2021/22 financial year.

TMH is consolidated using the equity method. In Alstom’s H1 2021/22 financial report, the book value of Alstom’s stake in TMH was EUR 482 million, with a currency-adjusted balance of EUR 169 million.

Alstom was developing a partnership project with the Ukrainian railway operator UZ, including the supply of locomotives and related services.

In February 2022, Ukrzaliznytsia and Alstom signed a contract for the supply of locomotives worth 900 million euros, under which the French manufacturer will supply 130 locomotives.

Now Alstom says that the current discussions on this project are suspended due to the war between Russia and Ukraine.

Alstom has expressed its deep solidarity with UZ at this dramatic time and is closely following the situation currently unfolding in Ukraine.

“The safety of our employees and their families is, as always, our top priority. To manage the situation from the very beginning of the conflict, a special group was created, which takes measures for the best support,” Alstom reports.

In the current situation, many international companies have decided to suspend or abandon their business investments in Russia.

After Russia’s military aggression against Ukraine, Western countries imposed sanctions. The EU has adopted a comprehensive package of restrictive sanctions, including a ban on the provision of funds or economic resources to individuals and legal entities.

In the financial sector, the sanctions are associated with a reduction in Russia’s access to EU markets, an increase in the cost of borrowing for sanctioned organizations, and the gradual destruction of Russia’s industrial base.

Sanctions on the energy sector include a ban on the export of certain technologies, in the transport sector, the EU has banned the export, sale, supply or transfer of all aircrafts, aircraft parts and equipment to Russia, the provision of all related repair, maintenance or financial services.

EU airspace has been closed to all Russian-owned, registered or controlled aircraft.

Three-quarters of Russia’s current commercial air fleet is built in the EU, US and Canada.

This means that Russia will not be able to maintain its fleet in accordance with international standards.

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