President Vladimir Putin said Russia will challenge Europe and the U.S. in aerospace as the country rebuilds an industry that once rolled out a quarter of the world's commercial aircraft fleet.
Russia ``has new economic possibilities'' to gain a greater share of the global market for civilian passenger and transport planes and ``keep its leadership in producing combat aircraft,'' Putin said today at the opening of the Moscow Air Show.
More than 780 domestic and foreign producers from 110 countries are participating in the biennial event, Putin said at the once-secret Zhukovsky airfield near the Russian capital. OAO Unified Aircraft Corp. expects contracts of more than $1 billion at the show, Chief Executive Officer Alexey Fyodorov said.
Putin pushed Russia's aerospace manufacturers and designers to merge into state-controlled Unified Aircraft to create a business with the scale to compete abroad. Russian companies aim to build and sell 4,500 civilian and military planes valued at $250 billion over the next 18 years, Fyodorov said Aug. 15.
Indonesia signed a contract today for three Sukhoi Su-27SKM and three Su-30MK2 fighters valued at as much as $330 million, Sergei Chemezov, chief executive officer for Russian state arms exporter Rosoboronexport, told reporters at the show. Russia is the biggest arms supplier to developing countries.
``Unified Aircraft Corp. plans more active entry into the world market for competitive civilian and transport aircraft,'' Putin said.
Unified Aircraft is Putin's effort to restore Cold War production levels and compete with Toulouse, France-based Airbus SAS and Chicago-based Boeing Co. Russia has as much as $8 billion in orders for combat jets and expects to more than double the airliner backlog to $3.5 billion this year from $1.5 billion.
That effort received a boost today with Russian airlines including GTK Rossiya, whose customers include the Kremlin, ordering about $600 million of aircraft from domestic manufacturers.
Rossiya signed an accord with Ilyushin Finance Co. for one Il-96-300 long-range plane and 12 Antonov An-148 short-range aircraft, Ilyushin Finance Chief Executive Officer Alexander Rubtsov said in an interview at the show.
``The Il-96 is for the presidential administration'' and costs about $75 million, Ilyushin Finance spokesman Andrei Lipovetsky said. The An-148s sell for about $22 million each.
Billionaire Alexander Lebedev's new low-cast carrier Red Wings signed a $250 million contract with Ilyushin Finance for six Tupolev Tu-204 mid-range airliners.
Vnesheconombank, a state-owned lender, signed an agreement today with Unified Aircraft to help finance its development, including upgrading plants and consulting on an initial public offering. The bank may become a shareholder in the aerospace company, Vnesheconombank said in a statement.
The Moscow-based bank, the former Bank for Foreign Trade for the Soviet Union, also agreed to finance international sales of the SuperJet-100, a new mid-range passenger airliner produced by Sukhoi Civil Aircraft Co.
``It is a further boost of government support in the project,'' and the bank will provide export loans on some transactions, said Mikhail Pogosyan, chief executive officer of the planemaker's parent, OAO Sukhoi Aviation Holding Co.
Vnesheconombank separately said on its Web site that it signed an agreement with Almaz-Antei Air Defense Concern to help finance building of factories for advanced-technology air defense systems.
Russian aerospace companies built 26 civilian planes last year, the Industry and Energy Ministry said in a report on its Web site. Airbus, the world's biggest maker of commercial aircraft, has delivered 269 planes this year and second-ranked Boeing has shipped 253, according to figures from the companies as of Aug. 9. Russian carriers have imported and contracted for hundreds of jets from the West in the last decade.
Exports of Sukhoi and MiG fighter jets helped Russia's aviation industry survive after the Soviet Union collapsed. Commercial aviation is the top focus now, Unified Aircraft's Fyodorov told reporters in Moscow a week ago. By 2025, the industry's annual production is targeted to reach 300 airliners, 100 transport planes and more than 100 combat aircraft.
Unified Aircraft will start a ``profound'' modernization of the Il-96 and Tu-204 and develop the regional Superjet-100 and an airliner similar to Airbus's single-aisle A320 model series, Fyodorov said at the Aug. 15 briefing. Unified Aircraft is holding preliminary ``consultations'' with Airbus on joint development of the model, with production to begin in 2015.
The Russian company expects to identify ``concrete'' ways to cooperate with Airbus's parent, European Aeronautic, Defence & Space Co., by the end of this year, Fyodorov said.
Russia has committed 18 billion rubles ($702 million) in state support for the industry over the next three years, including assistance to overhaul manufacturing facilities.
State-run OAO Aeroflot, eastern Europe's biggest carrier, last month approved buying 22 Airbus A350 XWBs and 22 Boeing 787 Dreamliner jets to upgrade its fleet beginning in 2014. The airliners, which seat between 250 and 350 depending on the version, are valued at more than $7 billion at list prices, though Aeroflot said it will pay less than $5.8 billion.
You've got to hand it to Vladimir Putin: he's not exactly slowing down as his term ends next year while he plots Russia's fate and his own. Whether it involves claiming a stake in the North Pole's soon to be available oil reserves, sending Russian bombers on regular flights again to protect I don't exactly know what, or contemplating a leadership role at a Russian energy company post presidency, the peripatetic Putin has a theatrical flair Bush could only dream of. Now, he has yet another plan to make Russia's aerospace industry a player in the airliner arena against the likes of Boeing and Airbus. This time around, however, the Russians won't have a "captive" market of Soviet-bloc countries to sell their wares to. As the country only built 26 (!) civilian planes last year, let's just say the likes of Ilyushin, Antonov, and Tupolev have a long, long way to go. It may be more Putin posturing, but damn, it's entertaining nonetheless. From Bloomberg: