Russia’s government has agreed to support UTair with 19 billion rubles ($328 million) in guarantees for the struggling airline’s creditors. In an April 1 statement, economic development minister Alexei Ulyukaev said the government had declined a UTair request for 40 billion rubles ($690 million) and he called on the airline’s owners to “take [on financial] obligations as part of the rescue effort.”

The government intervention raises fresh doubts as to whether thea company, which technically ranks as the third largest Russian airline, can survive. UTair’s balance sheet has felt severe effects of the collapse in the value of the Russian ruble against the U.S. dollar. Like other Russian companies, its options for seeking financial support have become somewhat constrained by sanctions imposed by the European Union and U.S.

UTair requested assistance from the Kremlin in late December 2014, when it struggled to meet finance payments owed to creditors such as Alfa-Bank, which had threatened to repossess aircraft. After it registered a formal request for support in January 2015, transportation minister Maxim Sokolov pledged that the government would intervene “so as to maintain a competitive environment in the airline industry.”

Alexander Neradko, head of Rosaviatsiya, the civil aviation arm of the transportation ministry, told reporters that Russia’s air transport industry should not take government support for granted. “The airlines applying to the government for help must come with viable plans for restructuring and a viable business model,” he said. “They must decrease their spending, optimize their business and make [themselves] lean. Those [business] models that were in place when the economic background was favorable and the market was rising are no longer workable.”

First reports about UTair’s difficult financial situation emerged in the summer of 2014, when the airline said it planned to launch a cost-cutting program called Impulse, involving a reduction in staffing levels and its route network.

By the end of 2014, the airline cut the number of routes by one-fifth and laid off 800 people. At that point, the level of debt UTair owed directly to banks stood at 63 billion rubles ($1.1 billion) and total accumulated debts at 170 billion rubles ($2.9 billion).

In 2013, the airline logged a loss of 4.5 billion rubles ($77.7 million), compared with a profit of 179 million rubles ($3.1 million) in 2012. Over the same period, revenues increased from 79.3 billion rubles ($1.3 billion) to 82.9 billion rubles ($1.4 billion).

Estimates for 2014 place revenue at around 74 billion rubles ($1.2 billion), but UTair’s debt burden has continued to sap its profits. The airline expects to report a 2014 loss of approximately 393 million rubles ($6.3 million).

Much of the airline’s debt stems from an ambitious fleet expansion program launched in 2011 involving orders for 30 Boeing 737-800s, 20 Airbus A321-200s and 15 ATR72-500s.

As part of last year’s Impulse cost-cutting plan, UTair said it would significantly reduce the size of its fleet, which stood at 117 aircraft in August 2014. General director Andrei Martirosov told AIN that under the plan the operator would retain only its existing Boeing 767s, as well as some Boeing 737-800s and the ATR 72s. In the process, it would cut annual leasing costs by 39 billion rubles ($673 million) by 2020 and by 69 billion rubles ($1.2 billion) by 2025.

According to airline officials, the Impulse plan saw 44 aircraft moved out of UTair’s core fleet (reducing it to 71 aircraft) during the second half of 2014 and first quarter of 2015. Of those, nine Boeing 757-200s and two Boeing 767-300s went to Katekavia, flying under the name of AzurAir.

In late 2014, UTair deactivated 12 Airbus A321s, 6 Boeing 737-800s and 15 Bombardier CRJ200s. In December, the airline refused to accept six Sukhoi Superjet 100s as planned in 2014 and canceled all orders for the type. At the turn of the year, the UTair fleet consisted of 50 Boeing 737s, 4 767s and 15 ATR72s.

In the middle of February, Martirosov told the Russian media that the airline “has to sell 12 A321s, and we are already talking with a potential buyer.” Eight more A321s remain on order, but UTair intends to renegotiate terms with Airbus for later deliveries.

Outlining prospects for 2015, Martirosov said he expects passenger traffic to fall by 25 to 30 percent. “We have to give up plans for an all-new, expensive fleet until such a time when the industry begins to rise again. Until then, we will focus on profitable routes,” he concluded.