Lack of new business at Rybinsk Motors dampens future prospects

Published: 7/20/1999

At a press conference to announce the company"s results for the first half of the fiscal year, Yury Lastochkin, Director General of Rybinsk Motors, claimed that: "The programs of creating and bringing into the market the new Russian aircraft IL-96M/T, Tu-204, IL-114, Be-200, and other similar designs are unreal. Neither real financing, nor "paying" demand exist for them". According to Lastochkin, the only ground for optimism lies in the potential market for the An-140. He does not expect that domestic aviation will keep his plant busy with orders. According to Russian accounting standards, however, in the first six months of 1999, Rybinsk Motors moved back into profit. In 1998, the volume of production declined by 20% compared to 1997, and sales dropped by 75%. The first six months of 1999 show a 17% increase in output, compared to the corresponding period in 1998, with an increase in sales of 100%. While the figures demonstrate growth, they are partly attributable to the company"s increasing dependency on the overhaul of existing engines. In the first half of 1999, the plant manufactured 10 engines: one less than in the first six months of 1998. In addition, growth in the production of power equipment has also contributed positively to the figures. As a result, according to Lastochkin, the plant made sufficient profit to pay an interim dividend amounting to 500-600% per share (equivalent to 5-6 roubles per share). Lastochkin's frankness may be more realistic than gloomy. He is well aware that the industry is undermined by a dwindling Russian fleet, which will ultimately impact on the overhaul business, too. Rybinsk Motors is in a much better position than most to weather any storm, even if future growth is hampered by the general state of the economy. The company has also recently been the victim of a widespread conspiracy to steal engine parts (Concise 6/22/99). The thefts will have meant that some airlines have avoided payment, so adding to Lastochkin"s irritation.

Article ID: 689