New factory will help company to cut production costs and expand into broader market after flotation

Russian manufacturer Irkut may split its defence and civil businesses as it attempts to expand following a flotation within the next few months.

Irkut manufactures the Beriev Be-200 amphibious firefighter and the Sukhoi Su-30MK multirole fighter at its factory in Irkutsk in eastern Siberia. Irkut president Alexei Federov says the company is evaluating the acquisition of "several other facilities" as it attempts to reduce production costs and broaden its market.

"While both areas are complicated, their production cycles are very different, so to avoid downtime gaps, we need to separate them," he says. Under the plan, civil production would move to a newly acquired factory, while the Irkutsk plant would specialise in military integration work, which it already performs for the Su-30MK.

Federov says the company plans to increase the civil side of its business to around 50% of revenues from less than 10% today, adding that the most likely move is to concentrate on niche products such as the Be-200.

Irkut is the largest privately-owned aircraft manufacturer in Russia and expects to launch its initial public offering (IPO) by the end of June. Federov declines to offer a valuation for the company, but analysts estimate it to be worth around Rb1.5 billion ($526 million), based on 2002 sales of $528 million and an order backlog of $4.5 billion. The company doubled its earnings before tax, depreciation and amortisation in 2002 to $103 million, according to accounts drawn up under US general accounting and auditing practices.

Irkut is halfway through a modernisation programme of the Irkutsk plant. It has invested $30 million in over 250 new machines since 2001 and expects to complete the programme with an additional two years' investment at $10 million a year, says Aleksandr Sergunov, Irkut's chief technology officer.

Irkut has already acquired the Beriev and Irkut AviaSTEP design bureaux to bring development in-house, as well as systems specialist Russian Avionics. Federov says more strategic acquisitions are planned, but will depend on Russian government plans to create a single aerospace company (Flight International, 25 November-1 December 2003).


Source: Flight International