FARNBOROUGH: Russia's resurgent United Aircraft

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For United Aircraft (UAC), Russia’s state-owned aerospace giant, the last 12 months appear to have been a period of consolidation and reinforcement. Its two flagship civil programmes have made solid if unspectacular progress, largely avoiding the calamities of previous years. And on the military side, deliveries of current models have continued apace to its defence ministry clients in Moscow - as well as healthy number to export customers. Development of the next-generation of fighter aircraft had appeared to be going smoothly too, albeit a 10 June fire aboard a Sukhoi T-50/PAK-FA prototype may cause more problems than the company so far believes. Meanwhile in the background UAC has continued with the deep restructuring process that has been in play since 2011.

In the commercial airliner business, UAC is still attempting to iron out the early wrinkles of its Sukhoi Superjet 100 programme, while evaluating any response to future competition in the segment, notably from Embraer with the re-engined E2 versions of its EJets. Production of the twinjet continues to ramp up, with output of the SSJ100 hitting 25 aircraft in 2013 which will rise to 40 aircraft this year, with the potential that this will grow to 62 units by 2016. Mind you, even combined the sum total of those three years of production is barely more than a typical 12 months’ output at its Brazilian rival.

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The T-50, also known as the PAK/FA, is United Aircraft's flagship fighter programme

United Aircraft

But Mikhail Pogosyan, president of UAC, remains happy with the progress made on the SSJ100 so far. “We are offering the best product to the market that exists in this class. It is over 10% better than the closest competitor on economy. We already have the airplane of the future that is flying now. We’ve launched the SSJ100 upgrade program which will enhance the performance and further improve the operational efficiency to overcome the challenges of new products made by competitors,” he says.

“And from a point of view of [passenger] comfort it is on an absolutely different level to what is offered to regional carriers now, we’ve got very positive feedback from a survey of Interjet’s passengers,” he says.

“Additional capabilities” are already added to further enhance its appeal, he says, citing the certification last year of a long-range variant of the jet as well as Cat 3A landing performance. “It is an aircraft that today corresponds to the future products of our competitors,” says Pogosyan.

However, there is the small issue that Embraer’s backlog for the second-generation EJet has already outstripped the SSJ100’s total of around 200 firm and tentative commitments. But Pogosyan is unconcerned.

“I am very happy for Embraer. I am not disappointed by the fact because actually Embraer has been in the market for a longer period than us, we are a new player with almost 200 orders. The future programs are still in progress, and there we have no precedents when airplane programs were fulfilled without delays, and while others are still launching their products we’ll have ours available and put into serial production,” he says.

And Pogosyan plays down rumours that UAC is planning to re-engine the regional type to address the potential competitive advantage that next-generation turbofans will confer on the E2 EJet and Bombardier’s CSeries. This is the unique case when the engine is perfectly fit to the airframe to ensure the competitive advantage of the entire platform. Customers are happy with the reliability and performance of the existing PowerJet SaM146 engines, he says.

"With this engine and the performance features we have today already implemented on this aircraft we have advantages over the prospective aircraft of our competitors, even having in mind that they are re-engining their aircraft.

"We don't need to hurry - why should we improve a product that is already better than the future ones?" he says.

At the same time, development of the Irkut MC-21 is continuing, with assembly work underway on the first three ground- and flight-test aircraft at its Irkutsk assembly plant. The single-aisle – which sits in the 15-180-seat segment – will benefit from a version of the Pratt & Whitney geared turbofan engines that will power the Airbus A320neo family. First flight is tentatively scheduled for 2015, ahead of certification and entry into service the following year. Sales of the single-aisle have been reasonable – certainly compared with those of the SSJ100 – and it has amassed a claimed 175 firm orders with a further 75 covered by memoranda of understanding.

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A decision on the largest variant of the Irkut single-aisle airliner is expected some time this year

United Aircraft

However, there remain two issues on the civil side that United Aircraft has yet to address. Firstly, what to do about the yawning gap between the highest-capacity SSJ100 at 103 seats and the -200 shrink variant of the MC-21 which will accommodate 150 passengers. And secondly, whether or not to proceed with the proposed 212-seat -400 stretch model of the MC-21. On the first point Pogosyan says UAC is "thinking of the interim product" to address the market segment of around 130 seats "which will combine all the products into a single line". A new aircraft would "accumulate the best achievements from the two previous programmes" he says.

In the meantime, however, Sukhoi will work to "make further movements within the basis of the existing [SSJ100] airframe", he says, potentially raising capacity to 108 seats. But he stresses: "It is not our strategy to stretch the aircraft.”

Equally, no decision has been taken on the proposed largest variant of the MC-21, although UAC is working to identify its strategy for the segment.

In the defence market, however, UAC continues to occupy a strong position with Sukhoi, and to a lesser extent RAC MiG, producing a broad range of combat aircraft, and Irkut the widely-respected Yak-130 combat trainer. Flight tests of the fifth-generation PAK-FA are also on going as Sukhoi attempts – fires notwithstanding – to certificate and deliver the stealthy type by 2016. Russia’s defence ministry has yet to confirm an order for the T-50 and Pogosyan declines to be drawn on the size of any potential deal, but says it believes there is a total potential market of 600 aircraft. That includes a possible order from India – a “long-term strategic partner”. UAC is participating in a joint fifth generation program with India, and it envisages the potential for a substantial order from the nation’s air force, “besides the operators of our current products could order a new product as a perfect addition to increase combat capabilities of their fleets, “ says Pogosyan.

Sukhoi continues to build and deliver a number of modernised variants of the Su-27 – the Su-30 and Su-35 – while for MiG the immediate future is not as busy. A large market exists for upgrade work on Soviet-era MiG-29s and Moscow recently confirmed a deal for an additional 16 examples of the current SMT model. However, observers agreed that this is more a means of keeping the production line at Lukhovitsy ticking over until the eventual arrival of an order from the Russian air force for the developmental MiG-35. This could also usher in export deals, with Egypt identified in the press as one possible customer.

Development on unmanned air vehicles, at least compared with its US counterparts, is an area where UAC appears to be lagging. However, Pogosyan is clear that will change. “We have a whole range of programmes relating to unmanned air vehicles for different purposes and we work on the feasibility on the development of this range for our customers.

“The technology that we have mastered through our latest programmes like the fifth-generation fighter and advanced fourth-generation aircraft let us be quite confident that we can successfully develop this range of UAVs.”

But until the customer – the Russian defence ministry – confirms its exact requirements, any comments are premature, he says.

At a corporate level, meanwhile, some progress can be detected, although revenue gains have been more than offset by the need for large-scale reinvestment in production capacity and development programme costs. Its accounts for the period ended 31 December 2013 show pre-tax losses ballooning to Rb12.9 billion ($364 million), which Pogosyan blames on the rising investment costs required for the development of the whole range of new programs in all segments including SSJ100 and MC-21. Revenue grew however, up 28% to Rb220 billion, while development costs stood at Rb52.3 billion up from Rb44.9 billion a year earlier. Production was also raised by 30% in 2013, with that rate of increase also expected to continue in 2014 and 2015. “The level of losses doesn’t make me happy but the growth of production and operational revenues show that we are moving in the right direction. Operational revenues growth is a sign of good progress of any business,” says Pogosyan. Profitability will come in the next two to three years, he insists: “It is not an estimate – it is not based on guessing but on real figures.”

Meanwhile, the restructuring of the various businesses under the UAC umbrella is proceeding. Recent developments on this front include the merging of its Ilyushin and Myasishchev design bureaux into a new business unit called UAC Transport Aircraft, specifically focused on “advanced military transport aircraft”. And on 31 May, UAC confirmed that its venerable-yet-struggling Tupolev bureau had been merged into a single entity with the Kazan-based KAPO production facility to make a further step towards special purpose aircraft division of the corporation. Previous changes and initiatives led to, amongst others, the creation of the AeroComposite business for the research and production into advanced composite materials, which in turn is supplying the MC-21 programme.

Pogosyan is confident that the work is both necessary and successful. “I am quite happy how we are reshaping the industry for the needs of our current and prospective products,” he says.