Aeroflot announced yesterday that it was severing connections with Aeroflot Nord following Sunday's fatal crash of a 737-500 operated by the regional affiliate. The Russian flag carrier said Nord would no no longer operate flights under its code nor be allowed to use its name.

"A decision has been taken to completely sever cooperation with Aeroflot Nord," CEO Valery Okulov said at a Moscow news conference. "We have paid too big a price for providing our logo to the company."

Aeroflot owns a 51 per cent stake in Nord and described the carrier as a "subsidiary" prior to the crash, which killed all 88 passengers and crew.

It is unclear whether it will retain its stake, but Okulov said that going forward Aeroflot would operate flights previously delegated to Nord with its own mainline aircraft.

Aeroflot has announced its decision even as Russian authorities began to investigate the crash.

The 737-500, enroute from Moscow Sheremetyevo, was approaching Perm for a landing when it lost radio contact at 3,600 ft and crashed just hundreds of meters from a residential area on the city's outskirts.

Senior officials said the crash was apparently caused because of a fire in the right engine. Investigators said the cockpit voice and flight data recorders had been recovered but sustained "serious damage" and are in "poor condition," adding that "additional work using special equipment" would be required before any information could be extracted.

A air traffic controller, who was in contact with the doomed aircraft prior to the crash, told Russian TV channels that the flight deck crew were behaving erratically. "The pilot. . .wasn't obeying my instructions," Irek Bikbov said. "I informed the pilot that he had reached a point where he should go down. He confirmed he was going down but kept climbing."

He said the aircraft also turned left when he instructed it to turn right and that the pilots insisted everything was fine when he asked them what was wrong.

Officials also ruled out terrorism as a possible cause, explaining that tests conducted on aircraft fragments offered "no proof" of explosives.