Russia to develop 50-80 seat regional jets with Boeing (700 words)

Published: 8/14/2001

On 13th August, Boeing announced the signing of an agreement for a joint venture with the civil aircraft division of ANPK Sukhoi, Sukhoi Civil Aviation and the Ilyushin Design Bureau, to develop a 50-80 seat regional jet with a range of up to 6,000 km. The agreement was reportedly signed in June after a year of work on the project by those involved. The exact value of the project, which was announced in principle earlier this year, was not specified, but was said to be "several hundred million dollars", with the funds to be raised by an as yet unappointed adviser, although Moscow investment bank, Troika Dialog is involved in the development plan's working party. The three parties along with the bank are putting together a business plan for the development that is due to be completed by the end of the year, with the first preliminary plan expected by 15th November, to define the investment requirements in order to bring the aircraft into production. Under the agreement, Boeing will be responsible for marketing and leasing through Boeing Leasing, as well as international certification. Sukhoi will be responsible for overall design and coordinating production, while Ilyushin, with whom Boeing has longstanding design agreements, will be responsible for obtaining domestic and international certification for the aircraft. The aircraft, planned to be a family with variants offering 55,75 and 95 seats, is expected to fly by 2004 and be in production by 2006-2007. As yet, the engine for the new aircraft has not been decided but, according to Sukhoi's General Director Mikhail Pogosyan, it will probably be a Russian-built engine, produced as a joint venture with a foreign producer. The partners are also looking at the possibility of offering engine options to prospective customers. The plant to produce the aircraft has also to be decided, according to Pogosyan. The JV has been welcomed by the Russian authorities with the Russian Aerospace Agency (RAKA),General Director,Yury Koptev, saying that the programme complimented rather than competed with the struggling Tu-334 programme and will also have the advantage of not being budget financed, therefore allowing more of the limited Rb1 billion to go to other programmes. It will also deliver Russian carriers with a Russian product to replace aging Tu-134s and An-24s. In Russia, as with many other markets, the regional segment is one with strong growth potential and seems likely to replicate projections of global market share growth from its current 7% to 17% by 2020. Having abandoned the 717-300, Boeing is seen to be in need of such an aircraft for its portfolio. The low cost of production offered by Russia has given the venture a target of turning out an aircraft 20% cheaper than its rivals, which must be an attractive option for the US producer. The partners already have an intention to purchase from Aeroflot to acquire thirty aircraft and are reported to have interest from Russia's recently revived civil aircraft customer, China. For Aeroflot, with its increasing network of short domestic routes with low load factors, the need for this kind of aircraft is already established, with Valery Okulov, the airline's General Director currently in negotiations with Embraer and Bombardier, to fill the current gap before the introduction of the Russian Regional Jet. The new western aircraft and the RRJ will offer Aeroflot both a replacement and addition for its small short haul fleet of Tu-134s and removes the need to use larger aircraft. According to Aeroflot's Deputy General Director, Alexander Zurabov, the development is one that it is keen to participate in and he estimates that the airline's demand could exceed 30 aircraft, with potential sales of hundreds to the Russian airline industry as a whole. Given the scale of the venture, the regional jet programme marks yet another increasingly cooperative move on the part of the Russian industry towards the west, recently highlighted by the large scale contracts between the industry and EADS. It also may scotch the efforts of certain elements to close the market - and deservedly so,given this kind of commitment - with the payback of easier access to the market.

Article ID: 2708