MAP MG Capital

RNS Number:0749Q
MG Capital PLC
24 January 2007



MG Capital plc: Stock Exchange announcement

MG Capital plc ("MG") has acquired through a wholly owned subsidiary a 4%
beneficial equity interest in Sky Express, Russia's first budget airline, which
is due to launch its first services on 29th January 2007. The shares were
acquired in exchange for work done in assisting the setting up of the airline
and introducing investors.

The airline will commence operations with two Boeing 737s flying between Moscow
and Sochi, Rostov-on-Don and Murmansk.  A full marketing and advertising
campaign started yesterday, Monday 22nd January.

The agreed initial value of the airline  is $48 million, a large part of which
consists of shareholder loans (in which MG does not have an interest), and it is
anticipated that this could increase to around $90 million as further tranches
of investment are made by the financial backers of the airline, including the
European Bank for Reconstruction and Development, other London-based investors,
and Boris Abramovich, director-general of Krasnoyarsk Airlines (Russia's third
largest carrier), which would consequently dilute MG's equity interest.

The airline intends to revolutionise domestic travel in Russia by offering cheap
travel on modern western aircraft, providing direct competition for the railway
network which currently accounts for the bulk of domestic long distance travel.
From its base at Moscow's Vnukovo Airport, Sky Express aims to carry 600,000
passengers in the first half of 2007 by using a fleet of six leased Boeing 737s,
and to expand to 16 aircraft and 3.5 million passengers in 2008,  with
break-even targeted  in that year.  By the end of four years the airline
believes it could be carrying seven million passengers.

Sky Express is being innovative in marketing and ticket sales.  Through its
marketing agreements with the Russian post office, with one of the country's
main banks, and with one of the biggest Russian mobile phone stores, it will
have 56,000 outlets throughout the country for ticket sales. Customers will also
buy tickets on the internet and by using those pre-paid cards already widely
used to top-up mobile phones.

Enquiries:

Charles Fowler, MG Capital plc                     020 7332 2040

Hugh Oram, Nabarro Wells & Co. Limited             020 7710 7400





                      This information is provided by RNS
            The company news service from the London Stock Exchange
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