Regional interests very concerned about the proposed privatisation of KnAAPO

Published: 5/19/1999

Russia"s regional association, the Far East and Transbaykal parliamentary assembly, has issued an appeal to the Russian parliament, government, the president"s administration and the Security Council, calling for the exclusion of the Komsomolsk-na-Amur aircraft building plant [KnAAPO) from possible privatisation. According to the association, the decision, in August 1998, by the Russian government to privatise the plant would inevitably result in “serious negative consequences for the Far East region"s economy". The association backs proposals by the staff of the plant, the Khabarovsk Territory"s administration and the city of Komsomolsk-na-Amur in opposing privatisation of KnAAPO, which is the region"s leading defence industrial enterprise. In order to preserve the balance of interests between the state and the region, they propose instead to set up an aircraft building corporation in the form of a “Tovarishchestvo" (a form of a joint-stock company) which, they believe, would maintain the economic independence of aircraft engineering enterprises. In contrast to many Russian military enterprises, the KnAAPO facility has remained in reasonable health, owing to the Sukhoi export book. The reaction of the local government to potential privatisation is therefore not surprising, given the importance of the plant to the region, which is otherwise suffering severe economic problems, in common with many other regions on the periphery of Russia. However, the KnAAPO plant is currently surviving on a long tail of Chinese orders and its efforts to look for other activities in aerospace have resulted only in the Su-80. This is yet another high wing turboprop regional transport aircraft with a great potential market, but with no solvent customers. In addition, the aircraft is generally regarded as being difficult to build, owing to its podded twin boom structure. The Su-80 project, although notionally funded by the Russian Federation, has been primarily funded by KnAAPO, which, according to some reports, has spent in excess of $100 million on its development. GE is to provide the engines for the aircraft.

Article ID: 518