A planned USD$220 million bond by Russia's East Line will help fund expansion of Moscow's Domodedovo Airport, used by British Airways, and turn up competition on rival Sheremetyevo Airport, a local business daily said Tuesday.

British Airways switched its flights from Sheremetyevo-2, Russia's main international airport, to the newly modernized Domodedovo earlier this year.

Domodedovo is further from the city than Sheremetyevo but enjoys a direct rail link to the capital unlike its more established rival.

Alitalia and Lufthansa have also said they are considering using Domodedovo as an alternative to Sheremetyevo.

Vedomosti quoted an East Line spokeswoman as saying that Domodedovo, which receives domestic flights too, was hoping to handle up to 12.7 million passengers next year. The company intended to invest money in expanding passenger handling facilities at the airport.

A source at Sheremetyevo was quoted as saying that the airport would handle around 11.3 million passengers next year.

"Twelve million is probably the maximum in current conditions, until Sheremetyevo-2 is reconstructed and a third terminal is built," the Sheremetyevo source said.

Modernization of Sheremetyevo is being held up until the authorities award a management contract to run the airport to a private company. A number of Russian companies are interested in obtaining the contract, including the Alfa Group.

Another source, close to Sheremetyevo management, was quoted as saying that East Line might be concerned about stiffer competition from Sheremetyevo once private management is brought in.

(Reuters)