Russian aerospace industry consolidates to take on the world

President Vladimir Putin has said he hopes to revive Russia's once mighty aviation sector by merging civilian and military aircraft makers into one giant state-controlled company, the United Aviation Corporation (UAC).

The president was speaking at the MAKS-2007 air show east of Moscow, on 21 August. Altogether, more than 780 companies from Russia and abroad, including from as far away as Zimbabwe, are taking part in the six-day International Aviation and Space Show.

The new corporation combines key Russian aircraft makers like Tupolev, Sukhoi, Ilyushin, MiG and Irkut. UAC's goal is to produce and sell about 4,500 aircraft worth some $250 billion by 2025 and overtake even Soviet-era production records to compete on the world market with Boeing. Immediately, Russian airlines are expected to order some $600 million in Russian-built aircraft at the air show itself.

Joining the big league
Russia plans to secure at least 10 per cent of the world airliner market with newly designed passenger jets, in a bid to revive its Soviet-era clout in the aviation industry, Igor Shevchuk, the president of aircraft manufacturer Tupolev, now part of UAC, told reporters at the air show.

"Our strategic task is to take third place among the world's aircraft-producing countries by 2018," Shevchuk, who is now a top UAC manager, said, "It may seem difficult and ambitious, but if you remember what was done during the Soviet Union, it is a task Russia can easily achieve."

New passenger planes
Shevchuk said that Tupolev was developing a mid-range passenger plane that would have domestic or foreign-made engines and another wide-bodied passenger plane with a range of 5,000 km (3,125 miles), able to carry up to 270 people.

Sukhoi general director Mikhail Pogosyan said he would have 100 firm orders for the Sukhoi SuperJet 100, presently the best hope for Russia's civil aviation industry, by the end of 2007.

We're back!
Putin visited the air show on Monday. The president seems to be using any opportunity he can these days to remind the world, especially the US, that he is rebuilding his country's military, political, and economic might. Just a few days earlier, speaking at a Central Asian base where thousands of troops from Russia, China and central Asian countries were conducting joint military exercises, he ordered strategic bombers to resume patrols over the Atlantic and Pacific oceans for the first time in years.

And. presiding over the opening of the largest air show in post-Soviet history at the Zhukovsky airfield outside Moscow, he declared. "(We must maintain) our leadership in the production of combat aircraft." Russian aerospace officials are interpreting his statements as confirmation of the state's complete backing for a resurgent aviation industry that they say can compete with the United States, the European Union and China.

Russian aviation suffered when funding dried up after the fall of the Soviet Union, and formerly well-paid designers were forced to survive on meagre wages or went unpaid, while fighter pilots remained grounded for months because there was no fuel. Putin seeks to revive Russia's military as well as its civilian aviation, as a way to demonstrate Moscow's growing clout to the outside world and project the Kremlin's authority to voters inside Russia.

Airbus wants a stake
Airbus co-chief executive Tom Enders told reporters at the air show that UAC boss Alexei Fyodorov faced a huge task in integrating so many aircraft manufacturers into one functional entity. "They still have very impressive capabilities in design and engineering," Enders admitted about Russia's aviation sector. He said EADS was interested in acquiring a shareholding in UAC by swapping its present stake in warplane maker Irkut.

Boeing said on Wednesday that airlines in Russia and other former Soviet republics will need to spend about $70 billion on more than 1,000 new aircraft over the next 20 years, if they want to keep up with soaring air travel demand. Air traffic in Russia and the Commonwealth of Independent States (CIS) countries is expected to grow at over 6 per cent per year over the next 20 years.

Making strides
Putin seems determined to ensure his legacy as the leader who won back world respect for Russia before his second term ends next year. Whatever the Russian President's political or military agenda, rebuilding the defence and aviation industries are key goals for the Kremlin. And Russia is making progress.

A key player is Rosoboronexport, the state arms trader and main sponsor of the air show, run by Sergei Chemezov, who is sometimes mentioned as a possible successor to Putin. On the air show's first day, Rosoboronexport signed an agreement to sell Indonesia six Sukhoi fighter jets, which will be delivered between 2008 and 2010. The deal, estimated at $350 million, is Russia's largest arms contract with Indonesia to date. This year, Rosoboronexport has concluded agreements worth $2.5 billion to export Russian-made aircraft.