Privatisation of Rzeszow postponed in favour of potential joint venture

Published: 6/15/1999

The Polish newspaper, ‘Rzeczpospolita", has reported that the State Treasury Ministry has postponed the privatisation of the transportation equipment plant of the Polish aviation plant, Rzeszow. A tender for a privatisation consultant for the Rzeszow plant was to be held in summer 1999. This will now not proceed, and the ministry is considering the possibility of establishing a joint venture between PZL Rzeszow and a western investor. Snecma, the French group that intends to participate in the privatisation of WSK PZL Rzeszow, has declared its interest in entering a joint venture with the plant. During a presentation in Warsaw on 26th May 1999, Mr Philippe Humbert, Deputy President of Snecma, referred to joint ventures that would specialise in producing engines, aviation equipment and spare parts. The French group is also planning to produce undercarriages in Rzeszow. According to the State Treasury Ministry, the establishment of a joint venture with a western investor could improve the financial standing of the plant and facilitate future privatisation. The company intends that a proportion of Rzeszow shares would be offered to several strategic investors. A further tranche would be sold in a public offering. The Polish media has reported that Snecma is keen to be one of the strategic investors. It has been co-operating with the Rzeszow plant since 1994. According to AFP reports, Snecma"s contracts with PZL Rzeszow will be worth $1.5m in 1999. This is expected to rise to $2m next year and up to $10m in 2001. Snecma"s contracts with PZL Rzeszow amounted to approximately $800,000 in 1998. Since 1994, the Rzeszow plant has been manufacturing subassemblies for CFM 56-7 engines, which are produced by Snecma for ATR planes and purchased by the Polish Airline, LOT. Co-operation with a Polish manufacturer was provided as an offset in the contract with LOT. PZL Rzeszow also manufactures for other Snecma companies, namely Tech-Space Aero and Hispan-Suiza. Snecma Electronics System is also co-operating with the Warsaw-based Hydral on the modernisation of an admission system for Sokol helicopter engines, which are produced in Rzeszow. Mr Wladyslaw Jasiczek, Sales Manager for Rzeszow, claims that another company from the Snecma group – the undercarriage producer, Messier-Dowty, - is also considering cooperation with the Rzeszow plant. WSK PZL Rzeszow is one of the few defence industry companies that are currently profitable. The company has been profitable since 1993 and, in 1998, sales stood at PLN 262.1m, with net profits totalling PLN 11.8m. In the first quarter of 1999, the company made a profit of PLN 2.6 m on sales of PLN 69 m. Exports accounted for 71.6% of the sales. The deliveries of aircraft engine components to western engine manufacturers such as Rolls Royce, Pratt & Whitney, General Electric and Snecma represent about 40% of sales Recently, the company announced the signing of two more export contracts. One contract is with Algeria for the overhauls of Mi-2 helicopter engines. The other deal is with India, for the overhaul of 32 engines for Iskra jet trainer aircraft.

Article ID: 584