ANALYSIS: Russian Helicopters looks to civil market for renewed lift

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If you wanted proof that undoubted success in the military segment does not automatically translate into the civil sphere then you could look no further than Russian Helicopters. While its military products are in some cases class-leading – whatever you think of the Mi-17’s appearance it continues to sell in droves – the company’s two latest civil developmental programmes are showing teething troubles. The Ka-62, a 6.5t rotorcraft that features a great deal of Western content, is slipping ever later. First flight was originally due last year, but that has now been pushed into the second half of 2014. And the Mi-38, a 15.6t helicopter that made its first flight in 2003, has been crawling incrementally closer to certification.

But despite the mounting delays, Aleksandr Mikheev, general director of the Moscow-headquartered manufacturer, remains largely untroubled. Although he admits that the programme slippage does cause concern, he notes that delays are “inevitable” on new platforms. “If you recall those recent launches of Airbus and Boeing, they have also experienced some delays and problems in that [initial] stage of development,” he says.

Progress is being made of course. Static ground tests of the Ka-62 are under way and assembly of the next prototype is advancing “according to the production plan”, says Mikheev. He still expects certification and first delivery to be achieved in 2016. The Ka-62 is an important product for Russian Helicopters in part because of the high degree of Western content on the aircraft, including French-made Turbomeca Ardiden 3G engines. It also looks – and no criticism of the rest of the range is intended – as though it has been designed to appeal to customers who want an aircraft that does not resemble, to put it bluntly, a Russian helicopter.

Mikheev describes it as “an advanced high-tech helicopter that meets international requirements for safety, comfort and maintainability and at the same time retains all traditional qualities of Russian helicopters.

“From my point of view, it has a clear competitive advantage on the international market, including the Western market,” he says.

Meanwhile, on the Mi-38 programme, final assembly of the fourth and final flight-test article has commenced at Russian Helicopters’ Kazan production facility. This follows the maiden sortie of the third flying prototype on 29 September last year. Fitted with new Russian-built Klimov TV7-117V engines and avionics equipment from Transas, the Mi-38 is conceived as a multirole helicopter. Certification is envisioned late next year, with serial production following shortly thereafter. However, it is a programme with its roots in a now dissolved joint venture with the then Eurocopter that appears to be stumbling, rather than racing to the finish line.

Mikheev acknowledges the Mi-38’s long and painful gestation, noting that it has “survived many complex phases in the past”. He cites both economic and political reasons as causes for the schedule slippage, but says that renewed government attention and a stable Russian economy “had a favourable impact on progress of the programme”.

He says: “Today, with the help of public funding and our group’s own efforts and resources, it has entered the final stage.”

However, with a maximum take-off weight of 15.6t, the Mi-38 sits very much in its own class. The only comparable helicopter is the AgustaWestland AW101, which has yet to net a single civil sale and offshore oil and gas missions are typically conducted by lighter and cheaper rotorcraft in the 12t bracket. Nonetheless, Mikheev thinks those additional tonnes – and the capacity for up to 30 passengers – are a selling point rather than a disadvantage. “It indicates the existence of a certain free-market niche that the Mi-38 may successfully fill,” he says.

“Unique advantages of cargo-passenger cabin size, high speed and range make this helicopter one of the best deals for operation in the oil and gas industry, including oil platform servicing,” Mikheev points out, although when he says this, he is thinking more of facilities in Russia’s northern seas, rather than off the north coast of Scotland.

“According to market research, the market capacity for the Mi-38 is about 350 units by 2030, and there is some justification to believe that forecast figures may increase in the future,” says Mikheev.

Still, there is some good news in the civil sphere, with the latest A2 variant of the legendary Mi-171, making strong progress. A second flight-test prototype of the 13t helicopter is in final assembly and will join the flight-test programme later this year.

Further out, there is also the potential development of new rotorcraft, under the auspices of the Russian Advanced Commercial Helicopter (RACHEL) programme. Envisaged as a 10-12t-class aircraft, Russian Helicopters is presently “defining the concept” of the programme, says Mikheev. However, there is still debate whether this will simply be a very modern conventional helicopter or a genuine high-speed rotorcraft along the lines of the Airbus Helicopters X3 or Sikorsky X2 programmes.

As an adjunct to the RACHEL project there is a secondary industry-wide research effort to grow the know-how and technological expertise to produce “a high-speed rotary-wing aircraft with a speed of over 500km/h [270kt]” says Mikheev.

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The company's Mi-17 has been massively successful, and the Ka-52 is in service with the Russian air force

Russian Helicopters

But he urges caution, noting that “at the moment, we have not received interest from current operators [showing a requirement for] high speed itself”.

But one programme that will not be going ahead is a proposed joint venture with AgustaWestland to produce a 2.5t helicopter for the global market. The pact was originally unveiled at the MAKS air show in 2013 and lasted all the way until March this year, when the initiative was quietly shelved.

“At the end of March, we took a joint decision on not continuing to develop this project. The competition [in the segment] is quite high and we decided not to proceed,” says Mikheev.

Instead, the pair may look to deepen their relationship at corporate level. “We have got further plans, not only with regard to the development of helicopters, but also with regard to strategic partnership in the future,” he adds, although noting that any talks have been “quite preliminary” so far. And equally preliminary is a tentative agreement between the Russian and Chinese governments to work together to jointly produce an all-new heavy-lift helicopter. Little is known about the proposed design so far and further discussions on the programme are due in the coming months. But with the 56t heavy-lift Mi-26T in its portfolio, some technological and design know-how is likely to be leveraged from this helicopter, says Mikheev.

Of course, all this work in the civil arena – and that is without mentioning the Kazan Ansat or the latest iteration of the renowned Ka-32 – does not mean that Russian Helicopters is ignoring the military market. Far from it, says Mikheev, pointing out that the manufacturer is “working consistently” to enhance its line-up. “Our latest attack helicopters, the Mi-28N Night Hunter and Ka-52 Alligator, which are supplied to the Russian air force and offered for export, are among the most advanced and efficient military helicopters.

“The company is working to upgrade and improve the qualities of these helicopters, based on their practical use in the army,” says Mikheev.

Enhancements to the Mi-28N include the addition of a dual-control system to enable its use for pilot training while retaining its offensive capability.

“Training of a pilot on a real attack helicopter, and not just on a simulator is a unique opportunity, which, judging by reviews, many Western pilots envy.

“I am sure that the dual-control modification will increase the export potential of the Night Hunter,” says Mikheev. And although he declines to comment, recent reports have linked Pakistan as the latest potential customer for the Mi-28NE.

Despite the use of Western systems on certain helicopters – usually where no Russian equivalent exists – Mikheev says the company has a certain responsibility to nation’s wider aerospace industry. “Being a Russian company, Russian Helicopters aims to primarily use domestic technology while developing new aircraft,” he says.

It is that attitude towards nurturing its own supply chain that has led to the recent agreement with Kret, a sister company in the Rostec stable, to set up a joint venture called the Helicopter Avionics Integration Centre, with its main aim to “develop, manufacture and upgrade modern avionics for helicopters of all types and purposes”. And more widely, Russian Helicopters is also planning the creation of a “helicopter cluster” to unite eight separate businesses in Bataysk in the southwest of the country. Intended to occupy around 800 hectares (1,980 acres) of land at the disused Bataysk airbase, it will see the relocation of production from the Rostvertol factory in nearby Rostov-on-Don and will employ 10,000 people directly and around the same number in the supply chain.

Design of the new operation will be completed in 2015 and construction work will start the same year. The project is due to finish in 2019, which will also see the launch of one of the project’s key elements – a facility dedicated to flight-test operations.

“The only way to achieve return on the project is to integrate the flight testing station into the economic turnover entirely, so that it serves not only the core production but is used for testing aircraft repaired for the defence ministry and other customers, and for the training of specialists,” says Mikheev.

Other elements of the cluster will include a service and repair centre for the Russian military, a composites component production facility, a branch of the manufacturer’s Helicopter Academy and potentially the production line for any rotorcraft produced under the RACHEL programme.

The expansion of the business has been underpinned by a solid financial performance. In the six years from 2007 to 2013, helicopter production increased almost threefold. And last year Russian Helicopters increased revenue to Rb140 billion ($4.07 billion) and EBITDA to Rb26.3 billion. Although deliveries were slightly down in 2013, Mikheev pins this on adapted customer schedules, rather than a declining orderbook. Last year’s output puts the company third in the world for production of helicopters over 1.3t, he adds.

“We are growing rapidly, and that gives us some confidence,” says Mikheev. “In the next few years, our strategic goals are to strengthen the company’s position as a leading player in the global aerospace industry, to expand our model range, streamline production and develop our after-sales service offering.”

Overall, it hopes to increase its share of the global rotorcraft market from 14% to 20% based on the value of deliveries.

“Our achievements will also make a significant contribution to supporting Russia’s image as one of the few countries that is successfully developing high-tech helicopter production,” he adds.