Valery Savotchenko secures top post following NC"s departure in a move welcomed by both customers and suppliers (525 words)

Published: 10/9/2001

On 5th October 2001, Aviastar"s board elected Valery Savotchenko as the plant"s General Director, replacing the management team from New Community including Executive Director Valery Maltsev who resigned on 2nd October and Yury Ryazanov the General Director,who retires. Savotchenko"s appointment has been greeted with some surprise from some sources given that at 60, the former Director of Operations and Technical Service, has reached Russian retirement age. This is not a view shared by some of the plant"s customers, with Andy Lewis, Commercial Director of Air Rep, commenting that he regards Savotchenko as being “very forward thinking and open to new ideas", and someone who has developed close customer relationships. This view is echoed by Mike Bloor, Projects Executive for Russia and the CIS for Rolls Royce, who believes that the “well respected" executive has a firm grasp of customer needs and often acted as the interface between airlines and Aviastar. Savotchenko, who has worked at Aviastar since 1978, inherits a plant in some turmoil since the departure of the New Community (NC) management. Reports have suggested that, since April, NC focussed largely on the payment of wage arrears and utility debts, investing $9.3m in the plant between April and July 2001. Sources, however, say that little was done to push production ahead, with only Perm powered aircraft No.20 making progress and the airframes destined for Sirocco largely ignored in a bitter contract dispute that ensued over the price of the aircraft. Maltsev claims the price failed to reflect the increased input costs for the aircraft since the contract was signed in 1996. But the manner of the negotiations with Sirocco and other customers was reportedly somewhat high handed, resembling more of a demand than a discussion. NC for its part has suggested that it may seek to recover its invested funds, possibly through the courts, although given the plant"s current finances, this would appear to be something of an empty threat.Although sources from within the plant, have suggested that they may seek to be paid out by an incoming investor. Reports are beginning to offer more detail of the dispute between NC and Tuplolev over control of the factory. Besides the lack of experience among the NC team, Tupolev is reported to have been irritated by the fact that the investment was made as a loan with an interest rate, albeit a low 0.1%. NC"s argument is that it wished to protect itself against any reluctance to issue it with the shares originally agreed. Aviastar is now believed be looking for investors, with continued speculation that the funding will come from Kato Aromatic/ Sirocco Aerospace. While not confirming any further investment, the President of Sirocco Aerospace International, Tom Smith, welcomed the appointment of Savotchenko and said that Sirocco, in partnership with Aviastar and Tupolev, had been committed to the concept of the development of the Tu-204-120 for the last five years and that this goal had not changed with recent events. He added that Sirocco"s commitment to the ongoing programme remained intact. Sirocco is currently funding the European certification of the Tu-204-120, expected late next year. In September 2001, Sirocco signed an agreement to sell five Rolls Royce powered Tu-204-120C (cargo version of Tu-204) to China Southwest Airlines and China Northwest Airlines, although the price has yet to be revealed. The ongoing situation at the plant without clear plans of further investment, has returned to the situation prior to the arrival of NC in April with speculation as to what happens next.The region's administration and Igor Shevchuk of Tupolev are reported to be searching for financing. The general downturn in the global aerospace industry in the last month however, is unlikely to open many more doors than in April and the pessimistic would say, considerably fewer.

Article ID: 2810