As Russia's aerospace industry takes another step towards its goal of being fully unified from April next year as United Aircraft (OAK), global political developments indicate that the obstacles in the way of Russia becoming a more significant player in the West are falling away.

On the surface, prospects are now better than ever for Russia: the barriers to its entry to the World Trade Organisation are gone with the signing this month of a bilateral trade pact with the USA, American sanctions against Sukhoi are lifted, and there is optimism among Russian officials that the same will happen for Rosoboronexport.

President Vladimir Putin has said Russia would eventually be interested in taking an institutional stake of around 10% in EADS as part of a possible co-operation agreement, balancing out the 10% stake EADS owns in Irkut. However, the reaction to the news in September that Russia's state-owned Vneshtorgbank had bought 5% of EADS shares demonstrates that there is a degree of uneasiness about allowing Russian players the active role US officials see opening for them.

But Russian aerospace and defence firms are doing their best to position themselves to take advantage of their new opportunities abroad. OAK is to be divided into four business divisions: combat aircraft, civil aviation, cargo and military transports and "components and international co-operation".

Russia is confident that OAK will be a modern, efficiently structured entity, able to compete on the world stage. But the officials tasked with setting it up recognise that they have a long way to go.

Ivanov: OAK chairman

There are some concerns over the independence of the company: Putin has appointed defence minister Sergei Ivanov chairman of the 14-strong board of directors. MiG's Aleksei Fiodorov is taking on the role of chairman of the control board. Nine of the board of directors are state officials, including defence minister and first deputy chairman of the Russian government Ivanov, Russian air force commander Vladimir Mikhailov, head of the Federal Agency for Industry Boris Alyeshin and head of the Federal Agency for State Defence Order Sergei Putilin.

There are only two independent directors: the chairmen of Savings Bank Kozmin and VTB Bank Kostin. Alexei Fiodorov is considered "half-independent", as he holds with one hand the post of general director/general designer at state-controlled RSK MiG and with the second a large portion of shares in Irkut. Fiodorov is the only industrialist on the board. "It's normal taking into account that over 75% of OAK assets are in state hands," says Fiodorov, commenting on the fact that nine directors are state officials. But having independent directors should give a clear signal that the merger will result in a modern, public company, he says.

However, some external observers disagree: US-based analyst Richard Aboulafia of Teal Group describes the OAK grouping of companies as "a collection of extremely troubled legacy assets coupled with Sukhoi, which has no commercial experience". He concedes that the Russian aircraft industry has much to offer the West in terms of military aircraft technology, via Sukhoi, but in the commercial aviation sector "they have no experience in creating a competitive jetliner".


Russia argues that it is addressing the issues facing OAK: "Everybody understands that our main problems lie with civil aviation. We shall address issues of further modernisation of production models such as the Ilyushin Il-96 and Tupolev Tu-204/214 so that they stay compliant with all international regulations," says Fiodorov, although he adds that the main focus will be on new projects. "A strategic task" is the creation of a new mainline airliner to replace the ageing Tupolev Tu-154. The MS-21 is being groomed for that role. Fiodorov has also mentioned "a new regional airplane".

But Aboulafia points to the Superjet 100 as another cause for concern. He questions the level of demand there may be for the aircraft on domestic Russian routes, and points out that government control of the new entity may hold back its commercial success.

In the meantime, OAK plans are forging ahead. Fiodorov has called for the establishment of OAK's lead company in December. The Russian government will then hand over all state stakes in privatised aircraft manufacturers. After this, the next big step, set for early 2007, will be the incorporation of MiG and KAPO after they complete their transformation from state enterprises to joint-stock companies.

Source: Flight International