Growing business relationship between Rome and Moscow could lead to deal

Agusta Westland is in talks with Russia's Oboronexport helicopter production company over the possible licensed manufacture of the AW139 twin-turbine helicopter at the Ulan-Ude production plant, with the two sides aiming to sign a framework agreement in May, says Russian business daily Kommersant.

Sources in Oboronprom confirm talks have been under way, the report says. Russia's federal industry agency boss Boris Alyoshin says the two sides had intended to sign a memorandum of understanding in mid-March during President Putin's visit to Italy, but this was delayed until May due to "technical nuances", according to the report.

"Preparation for production at the Ulan-Ude plant could start as soon as this year," Alyoshin is quoted as saying. The Ulan-Ude plant now produces Mil Mi-17s.

AgustaWestland says "potential collaboration in the helicopter field is part of the general understanding between Finmeccanica and the Russian aerospace industry, although so far no specific projects have been discussed".

One potential obstacle to a deal is Russian legislation. In October 2006, Putin signed into law a bill restricting foreign participation in Russian aerospace concerns to a maximum of 25% without the specific authority of the head of state.

This might be granted in this case, given the increasingly warm business relationship between Russia and Italy, which has recently signed major energy deals with Moscow.

Demand for the 15-seat AW139 in Russia and the CIS is potentially enormous, with the nation's fleet of Mi-8/17s in the oil and gas industry approaching obsolescence.

Last year, the Ulan-Ude plant's general director Leonid Belykh said that it was looking for a foreign partner because of problems in starting production of the Kamov Ka-62, the nearest Russian equivalent to the AW139, citing engine development problems at supplier NPO Saturn, including a high specific fuel consumption.

In 1995, before the creation of AgustaWestland, Agusta agreed to co-production of the Kamov Ka-64 in Russia, but the deal fell through.

Source: Flight International