MOSCOW. russia’s Unified Aircraft corporation (UAc), which is due to become a legal entity late in october and which will be 75% state-owned, has taken the risk of obtaining a blocking stake in the European Aeronautic defence & space co., EAds.
Now it controls 5.02% in the European holding, but is seeking to raise its stake to 25% plus one share. Even if it fails to acquire a blocking stake, russia’s new corporation would like to be able to take an equal part in strategic and general decision making with the EAds’ major shareholders.
Unfortunately, Europe has not given russian such access to the EAds’ capital, and even the presidential lobbying failed to persuade the European company to establish closer contacts with the UAc.
yet, things may change, and tomorrow the EAds may find the UAc a solid partner and the dialogue may take a suitable turn for russia, which may negotiate an equal participation of the capitals of the UAc and the EAds in their assets and, most importantly, in designing and making new-generation comfortable and inexpensive aircraft for safe flights.
The idea to set up the United Aircraft corporation was born long ago, and attempts have been repeatedly made to implement it, but it has so far crashed against a wall of market economy principles that prohibited a single entity from controlling more than 33% in a sector. russian President vladimir Putin gave the project a green light in his address to the upper house of russia’s parliament, when he called for the creation of state-controlled holdings in the key sectors of the russian economy, whose enterprises have lately been unable to compete on the global market on their own. Among these spheres are nuclear energy, the aircraft industry and ship building, where russian enterprises could not up to now say no to importation. Today, the United Aircraft corporation is the only way out of a deadlock facing the sector. mr Putin repeatedly emphasized that it was necessary to establish the UAc in his televised Tv dialogue with russians on october 25th.
A more frequent number of air crashes has been prompting aircraft developers and air carriers to con- solidate. According to the russian Transport ministry, in the past five years there have been some 100 air accidents, including 40 air crashes which left more than 800 people killed. Transport minister igor levitin said this was due to a shortage of modern aircraft, pilots’ poor qualifications and a lack of tough flight safety control. strategic decisions should be made there as soon as possible. none of the operating design bureaus or aircraft makers, which have long switched to one-off production and hardly make ends meet, can solve the problem.
Alexander rubtsov, director General of the ilyushin finance aircraft leasing company, believes serial production of up-to-date aircraft in russia can be established through incorporation. if russia loses the time, foreign jets, mostly those aircraft whose service lives have already expired, will sweep the local market.
Today, not a single russian air carrier can afford to buy new foreign aircraft that cost two or three times as much as their russian equivalent. Aeroflot, russia’s largest airline, is the only air carrier in the post-soviet era, which can afford new foreign jets using the government’s powerful financial assistance.
Today 200 foreign aircraft are in service in russian and foreign airlines. most of them are used by russia’s Aeroflot and Transaero. The former has renewed its aircraft fleet owing to support by the state and privileges in purchasing airliners, and the latter has done it due to provided privileges. A 20% duty for importing foreign aircraft has been used in russia since 1993 plus the 18% added value tax. Aeroflot and Transaero did not have to pay import duties and vAT when acquiring foreign airliners for a number of years.
The other companies had to pay in full for every purchase, though they appealed to the government many times, asking to relieve them of this burden, saying that russian aircraft did not correspond to international norms of noise level and air emission.
Besides, russian airliners are expensive and offer less comfort. despite these requests and pressure on the part of the United states, which named a free access of foreign aircraft to the russian market as the main condition for the country’s accession to the world Trade organisation, the russian government, so far, does not venture to make these concessions and in order to protect national aviation industry, is unlikely to make compromise.
Mr. rubtsov considers that the new russian passenger airliners and freight carriers (rrJ and An-148), which are almost ready for mass production, may fully meet the demand on a greater part of russia’s market. The new aircraft of the Tu family (Tu-204 and primarily the new multipurpose medium-range and long-haul Tu-204-300) have proved effective.
The il-94-400, il-76 and Tu-204c look promising on the freighter market. Another important thing is that the market is ready to accept these planes and orders for them have been made in this country and abroad – 20 orders for il-96, 30 orders for Tu-204 and Tu-214 and 50 orders each of An-148, rrJ, An-140 and il-114 aircraft. The total sum of all the orders is estimated at $3.6 bln.
Naturally, at present none of russia’s aircraft plants can cope with this task fully, in time and on a due technological level. Usually, aircraft manufacturing facilities in the world unite to increase the scope of production. it is more effective and economical to control production costs of a united company than of separate smaller companies. in a state-run holding such expenses may be reduced by combining design offices and innovation divisions functioning under their control, coordination of technological chains, and so on. but will the planned state inputs of tens of billions of dollars into a United Aircraft corporation produce the desired effect? All refer to numerous “if’s” and “maybe’s.” Meanwhile, state control over strategic industries is necessary. neither the UsA nor the European Union can do without state orders and state regulation. but in industrialised countries schemes of this kind which do not contradict market principles have long been in use. will the United Aircraft corporation have them? if it will, then to what extent will they copy foreign practices and do they correspond to russian traditions? And to launch this process drawing only on the experience of the former soviet aviation industry would be a risky venture. After all, a russian aviation holding will have to work in conditions of the world market economy, where the interests of the state and corporate interests should be harmonised.
As for the compagny structure, sergei ivanov, the russian defence minister, has been appointed chairman of the board of the compagny, while Alexei fyodorov, former head of miG corporation and co-owner of the irkut company, was appointed director general of the corporation.
