Winner could find itself more compromised than victorious (555 words)

Published: 8/7/2001

The An-70 consortium, STS, has claimed that the Russian Aerospace Agency (RAKA) will make a decision by the end of August as to which of the nine plants that have applied to produce the An-70. This timetable is despite the agency only starting to evaluate the proposals on 8th August and will require completion of the analysis by 24th August. According to the plants, which did not include VASO, the criteria for selection comprised the following: - No debts to the budget - Good credit history - The production and technical capacity With the exception of some of the fighter producers - and IAPO is bidding - it is unclear which company would fulfill all these criteria, but it is, of course, an easy means of weeding out some of the no-hopers. For the winner, the state undertakes to reimburse within eight years the costs of setting up the production of the aircraft and, within 18 years, the cost of acquiring the associated tooling and equipment. RAKA also assures the successful producer that the programme will also have the highest Federal budget priority. From a producer's perspective, this is not, on the face of it, the most attractive package and suggests that much of the costs are going to be met from the producer's own resources. The costs of getting the production line up and running and the aircraft fully certified, are predicted to be in the region of $170m. This is, however, in the context of the increasingly lukewarm approach of the Russian Ministry of Defence (MoD) to the aircraft or, more precisely, its costs, given the potential of the re-engining and overhaul of its Il-76 fleet o at TAPO and the fact that, to date, the MoD has not made firm commitments - in the absence of specific budget funding - for the aircraft's acquisition. Reports have suggested that Aviastar has considerable interest in producing the aircraft and has deployed considerable political resources in endeavouring to win the contract. The question for Aviastar and other producers, including Polyet and IAPO, however, is how much are they prepared to devote to such a programme. Aviakor the original co producer with Aviant, failed to secure the programme, due to a lack of commitment on the part of its controlling shareholder, Siberian Aluminiun, which was reportedly spooked by the costs, despite its significant resources. IAPO,cash rich from fighter sales, appears keen to diversify its product range that now includes the Be-200 amphibian. For some facilities, in the absence of other options, the An-70 production may be the last opportunity to produce a large aircraft with some chance of international success, so leading them to play all for the chance. The concern expressed in some quarters, however, is that the successful plant may simply find itself saddled with reluctant Russian MoD orders that are likely to take time to come through and are unlikely to meet expectation. Any foreign orders, particularly from China, which has been seen as a potential customer for some time, and India, will probably mean that little of the assembly work will occur in the Ukraine or Russia , with much less value to the production plants individually, although they will obviously benefit from assemblies and equipment.

Article ID: 2693