Kazakhstan will create a new airline to serve domestic routes and has entered a partnership agreement with Canada’s Bombardier Inc on delivery of its first 10 planes, the oil-rich country’s sovereign wealth fund said.

President Nursultan Nazarbayev met Bombardier Chief Executive Officer Pierre Beaudoin on Wednesday and told him that the company would perform domestic flights and be called Air Kazakhstan, the presidential press service said.

“We must register the new company by May, attract an operator, and we already know who it will be, and buy these planes and deliver them by the end of this year,” Umirzak Shukeyev, head of the Samruk-Kazyna state investment fund, told a news conference in Astana.

“We will probably start flying early next year,” he said.

Shukeyev, whose fund manages state-run assets in strategic national companies worth tens of billions of dollars, gave no further detail of the deal with Montreal-based Bombardier.

Kazakh President Nazarbayev invited Beaudoin to open a representative office of Bombardier in his country.

In 2001, Kazakhstan and Britain’s BAE Systems Plc established Air Astana, in which the country, represented by Samruk-Kazyna, owns 51 percent and the British company the rest.

Air Astana made its maiden flight in May 2002 and according to its website now operates a fleet of 30 Western aircraft on domestic and international routes.

The creation of Air Kazakhstan will now allow Air Astana to focus mainly on international routes.

Kazakhstan, the world’s ninth-largest country by area with a population of just 17 million, is Central Asia’s largest economy and the second-largest post-Soviet oil producer after neighbour Russia.

Despite the country’s economic boom, domestic routes remain dominated by older aircraft made during the Soviet era.

Government data shows five Kazakh airlines make regular flights, 28 offer charter flights and five do cargo airlines.

Air Astana and Air Kazakhstan are expected to be close partners “if only because we are stakeholders in both,” Shukeyev said. (Reuters)