Remains unclear however, who will build and buy it!(850 words)

Published: 12/20/2000

The An-70 appears to be the subject of considerable interest of late. The General Director of the Sredne Transportny Samolyet (STS or Medium Transport Aircraft), Leonid Terentyev, said that Russia and the Ukraine had decided to finish the programme, in spite of the fact that certain foreign groups had yet to decide whether or not to participate. This is assuming that this covers both the German Air Truck consortium that cooperated on the An-7x option for the German Air Force and the interest from China (discussed extensively over 2000). The choice of participants in the An-70 project will be made in the first quarter of 2001. The final proposal for the programme will then be submitted to the Russian and Ukrainian authorities for their approval following a board meeting, scheduled for the end of December. Many companies have shown interest in participating in the production of the aircraft. The awarding of contracts will actually be decided by tender This is the first in the Russian/Ukrainian aerospace industry. The main criteria for awarding the contract will be those of cost and of the level of investment that the producer is willing to put into the programme. Among those to bid for the aircraft's airframe construction and assembly is Aviakor (reported earlier to be the Russian producer in partnership with Aviant). Having already made some initial commitments to setting up production, it must have been somewhat surprised by the introduction of the tendering process. It appears that Siberian Aluminium, its parent company, is unlikely to commit substantial funds to the plant, which is currently eking out a living by refurbishing Tu-154, with both its future programmes, the An-70 and An-140, in limbo. Yury Bardin of the Russian Aerospace Agency has suggested that the government's commitment to developing production of the An-70 at Aviakor has been the subject of discussion rather than of confirmation. For SiBal, the Aviakor acquisition has been less than successful. A recent meeting with the regional government to discuss the plant's future, appeared to favour a focus on aircraft upgrades and the production of components for other companies within SiBal's automotive interests. The recent acquisition of automaker Gaz, by SiBal, has also reduced the aluminium producer's focus on the plant, which is reflected in the change of primary responsibilities of SiBal's Finance Director from Aviakor to Gaz. The acquisition of Gaz has also taken a considerable part of SiBal's management time and in response to recent rumours about stake-building in Aeroflot, the company responded that Gaz has proven to be more than enough to handle. In contrast to Aviakor, Aviastar appears to be substantially better supported in terms of investment and, potentially, in terms of the tender's cost criteria. According to the case that has been actively made by Aviastar and its supporters (including cargo carrier Volga Dnepr), the commonality of parts and equipment between the An-124 and the An-70 will allow substantial economies of scale for the latter's production, at what is the most modern of Russia's production facilities. The investment in the project is a little less clear, but to date, little has been heard from the Kaskol Group, a substantial shareholder in Volga Dnepr and reported to be close to the Aviastar management. It is also a proven provider of resources to the aerospace industry elsewhere in Russia. If the programme is seen as being a collaborative affair, the likely outcome of the tender may be to break the programme up and involve all parties. Just such co-operation on the development of the D-27 engine has reduced costs from $2.5m per unit to $2m for the production versions of the engine (though orders for the engine as for the aircraft are still awaited). It is interesting to note that the lion's share of the funding of the engine has come from the resources of engine maker ZKMB Progress. It was reported in September to require a further investment of $30m. Ufa Engine Building was the Russian partner in the engine collaboration. All of this discussion may be academic, given that everyone is still awaiting the preliminary decision from both the Ukrainian and the Russian Ministries of Defence, to go ahead. Earlier reports suggested that the Ukrainians, while still interested, have substantially scaled down their potential involvement, with talk of 30 aircraft over a long period, due to budget constraints. There are also reports of less than consensus within the Russian MoD, with a considerable number of Air Force officers arguing that the cheaper PS-90-engined and stretched Il-76MF, may represent a better solution for the Air Force in the current budgetary conditions. Although both Ministries of Defence have supplied some funding to the programme, it still remains short of funds for both engines and airframes. It has only recently constructed the second frame for static tests at Aviant in Kiev. Overall, the An-70 is seen by many as one of the few globally competitive aerospace products that the Ukraine and Russia have. Failure to support the programme, aggressively, may have the effect of removing valuable market opportunities as many Western and former Soviet cargo aircraft reach the end of their useful lives, in both military and civilian use.

Article ID: 2253