Production delayed as Stetsenko looks for 20% drop in price (338 words)

Published: 3/7/2001

According to Alexander Stetsenko, the Ukrainian Deputy Defence Minister responsible for equipment, both Russia and Ukraine are seeking ways of reducing the cost of the An-70, to make it more affordable for the hard-pressed MoDs of the respective countries. This comment lends weight to the view that Ukraine, in particular, will experience great difficulty in providing sufficient orders to support the programme. The current price reported to be $50m (although still in negotiations), is too high for the Ukrainians. Stetsenko believes the cost could come down to $40m, through negotiations between plant and customer. The suggestion is that tax concessions to the producers could create a lower aircraft price. Given that most production facilities, and Aviakor in particular, are having trouble keeping their utilities operating, any tax concessions would have to be substantial for the producers and designers to give a 20% drop. The initial Ukrainian Government contract for the production of five An-70s, at Aviant in Kiev, has already been delayed, reportedly due to discussions over price. In Russia, despite a recent reaffirmation of commitment to the programme, it is still possible that the Russian Air Force may take a few aircraft, but settle for an upgraded IL-76MF, as a cheaper option for providing lift capability. Within the industry however, there is competition for the Russian side of the contract, of what is seen as one of the few programmes available outside of fighter aircraft with an upside. Aviakor, currently the planned producer of the aircraft, has recently been suggested as a possible merger partner for Aviastar and KAPO - focussing on the production of wings for other programmes. Aviakor has denied any decline in its commitment to the programme. Nevertheless, the evidence of this proposal being suggested by its own regional governor and that of Sibal, Aviakor's owner, apparently being unhappy with the plant's performance, may make it reasonable to surmise that Aviastar's lobbying to transfer production from Samara may be gaining momentum.

Article ID: 2396