Fast-growing cargo airline warns of urgent need to resume outsize freighter production as it prepares for 2007 IPO

Volga-Dnepr Group’s ambitious expansion plans are entering a critical phase as the company awaits a decision by the Russian government on whether to provide funds to help restart production of the Antonov An-124 outsize freighter.

An124 W250
© Volga-DNEPR

 A shortage of An-124s is looming
Meanwhile, the Russian cargo carrier is pushing ahead with plans for an initial public offering (IPO) next year, and is preparing to set up a Boeing 747 heavy maintenance facility in Ulyanovsk that could later expand to offer passenger-to-freighter conversions.

Volga-Dnepr, which claims to have secured more than half of the rapidly growing outsize freight market uniquely served by the An-124, says it will have insufficient aircraft to meet demand by 2008 unless production resumes.

“By 2008 a shortage of An-124s will be caused by market expansion,” said Volga-Dnepr president Alexey Isaikin, speaking in London last week. “By 2010 the requirement will be for six additional An-124s.” Factoring in the need to retire older aircraft, he added: “By 2030 the requirement will exceed 30 aircraft for commercial customers only”.

The Russian military will need more aircraft and a recent deal to supply An-124s for NATO’s strategic airlift needs could be extended beyond 2012, said Isaikin. He said $400 million was needed to restart production at Aviastar in Ulyanovsk. “We hope the state investment fund will provide $200-250 million. The rest will be provided by foreign investors or borrowed from the banks. We are expecting the first aircraft to be delivered in 2010-11.”

Isaikin said 50 more An-124s have to be produced for the project to break even. The first 10 aircraft would be acquired by Volga-Dnepr, and two existing operators have taken options on five each. Just under one-third of the aircraft would be earmarked for the military and the rest would cover retirements.

Volga-Dnepr, which operates 10 An-124-100s, two Ilyushin Il-76s and three Boeing 747-200F/300SFs, nearly doubled its sales between 2003 and 2005, to $480 million.

The group’s scheduled arm – AirBridge Cargo (ABC), which operates the 747 fleet – is to be hived off as a standalone airline. Isaikin said current plans call for the IPO to cover the whole group, but “if the market indicates it will be more profitable and feasible to sell shares in parts [of the group], we will do it this way”.

ABC is to introduce three more 747-200Fs – to enter service in June this year and January and March 2007, respectively. It also has a pair of new-build -400ERFs on order for delivery in October 2007 and February 2008.

In-house 747 heavy overhauls are provisionally targeted to get under way in the third quarter of 2007 with a C check. “It is absolutely sensible to go for in-house maintenance,” said ABC managing director Denis Ilyin, adding that the service could eventually be offered to third-party customers.

Ilyin said he had held talks with Boeing, Israel Aircraft Industries and Lufthansa Technik about the possibility of setting up a 747 conversion line.


Source: Flight International