New aircraft to assist the carrier's steady growth (799 words)

Published: 3/1/2001

Commenting on the acquisition of 10 Il-96-400s by Atlant-Soyuz at a press conference involving the participating players, Chairman Valery Menizky said that it was a vital move for the carrier, as it would have to gain access to markets over the next 5-8 years, since changes in regulations relating to noise and other factors would eliminate many of its older aircraft from key markets. The reason for choosing the Il-96-400, according to Menizky, was that its existing Il-96-300 cargo version had proved reliable on its regular cargo routes to the Far East, Kamchatka, Sakhalin, China and Korea. Although aware of Aeroflot's problems with the aircraft in its passenger fleet, it had not encountered similar problems in 2000 hours of operation. During discussions on a new aircraft, between Atlant-Soyuz and Ilyushin, the former specified requirements including an increase in the carrying capacity over the Il-96-300 cargo version, and also the incorporation of facilities for handling all types of containerised air cargo, including marine containers. According to Vyacheslav Terentiev, the Il-96's chief designer with Ilyushin Design Bureaus, Ilyushin always fulfils customer requirements. Sources within the bureau however, indicate that the aircraft has been on the drawing board for a number of years awaiting a customer to move it forward. Alexander Rubtsov (General Director of Ilyushin Finance Co.), who will provide the financing for the aircraft, believes the development of the -400 reflects extensive analysis of its potential competitors, such as the DC-10-30, MD-11 and B-747-400. The projected aircraft has delivered a performance akin to that of the B-747-400 in terms of operating costs, but at a substantially lower price. Tu-204Cs Speaking about the smaller 4 Tu-204C Atlant plan, for use in the off-season, Lev Lanovsky (chief designer - Tu-204) was also airing his customer friendly credentials when saying that the bureau took account of customer requirements, even when the Tu-204 was designed under the auspices of the Soviet Ministry of Civil Aviation. He said that airlines currently flying the Tu-204 were pleased with its operation, with a number of aircraft already qualifying for or being in the process of qualifying for independent maintenance. The cost savings for operators replacing Tu-154s with Tu-204s amount to 50% on direct costs, with the Tu-204 currently costing one operator, Kamovody, $1600 an hour. Lanovsky saw this as placing the Tu-204 in direction competition with the Boeing B-757, in terms of technical specification and reliability, but at the substantially lower purchase price of $25m (757's is $60m). Finance Alexander Rubtsov said the $450m deal would probably match a 12-15 year industry standard financial leasing deal, with the 14 aircraft being delivered within 5-7 years. Russian funding for the deal would come from talks with Russia's - Sberbank, Vnesheconombank, Vneshtorgbank, Russian Bank of development, Eurofinance, Guta-bank and his alma mater, National Reserve Bank - all of whom IFC is in negotiations. While declining to name foreign partners, as revealing the names too early would hinder negotiations, Rubtsov did indicate that there was current interest from three counter-parties in the US, Europe and the Middle East. He also added his hope of a favourable decision relating to government guarantees of aerospace leases on 15th March, giving Russian producers similar support to that offered to producers elsewhere. Rubtsov said that while the Russian banks would initially expect high guarantees of 85%, as the aircraft are sold and a market in them develops over 3-4 years, the requirement for guarantees would decline. He expected funding to be forthcoming without sovereign guarantees by 2007-2008. On the cost of the leasing structure, Rubtsov said that the current interest rate levels internationally of 7-8% were not available in Russia, where the prevailing rate is set by the Russian Government's Eurobonds (currently around 13%). He believed that the government would not seek to subsidize the rate for Russian operators, but the increasing reliability of Russia as counter-party, demonstrated by the recent Paris Club agreements, would help bring rates down in the future Atlant Soyuz For Stanislav Leichenko (General Director of Atlant-Soyuz), the new aircraft would contribute to his company's steady development. In 2000, it carried 600m tonne kilometres, a non-specific increase on 1999. He also added that the airline was planning to decrease its charter business in favour of scheduled routes. Atlant-Soyuz was founded in 1993 by a group of former Russian Air Force pilots with financial backers, including the Moscow City government financial holding company, Sistema, which holds a 19% share and the city itself, with a further 26%. According to Leinchenko, who controls 31% of the stock, its adoption of western operating methods into the Russian market has allowed them to grow since then; a growth sustained right through the dramatic downturn in the market at the end of 1998.

Article ID: 2388