Russia's Air Management Group is considering selling a stake in its US-based very light jet developer AAI Acquisition to help relaunch development of the A700 and expand the company's portfolio of services. Investment in AAIA, which acquired the assets of Adam Aircraft last April for $10 million, has become severely restricted due to the economic downturn.
AMG, a joint investment by Russian companies Industrial Investors and Kaskol, needs more than $100 million to achieve A700 type certification, says chairman Evgeny Andrachnikov. Half the certification work has been completed by Adam before it entered bankruptcy.
"These are difficult times economically and we need investors to help us spread our financial risk," Andrachnikov says. "We have a number of companies in our portfolio [including Russian business jet airline Velvet Skylines and Moscow-based air taxi operation Dexter], which also need significant investment, so we have to spread our funds carefully."
Andrachnikov says the acquisition of Adam and the continued development of the A700 "burned a significant amount of money" when the global economy was starting to falter. "However, when the economic crisis really hit late last year we realised the programme was exposing AMG to greater risk. So we decided to slow things down at the factory in Denver, Colorado and cut staff numbers from 200 to 40."
These drastic actions have had an adverse effect on the A700 programme. "By the end of 2009 we were planning to have 600 people working on the project," Andrachnikov says, with a view to gaining certification for the aircraft in the first quarter of 2010. Until AAIA can secure the necessary funding, the timeframe for A700 certification remains unclear, he says.
Andrachnikov remains confident that the A700 has a niche despite the recent high-profile collapses of Eclipse and DayJet, which have battered the reputations of the air taxi and VLJ markets. "No-one is better placed than us to develop a VLJ as we understand the market from a customer's perspective," Andrachnikov says.
In an effort to build its funds and conserve its cashflow, AAIR is now offering composite design, construction testing and certification services to companies in the aerospace, automotive green energy industries. "Over the past decade this company has developed unique capabilities in its work designing and building new aircraft," says Andrachnikov. "These would generate some revenue and help us to cover the monthly costs of keeping the business afloat." The venture might also attract investors for the A700, he says.