Management and government discuss plant's prospects (850 words)

Published: 10/9/2000

According to Irina Shapovalova of Siberian Aluminium (SibAl), the parent of Aviakor in Samara, a meeting took place recently to discuss the future of the aircraft producer under the chairmanship of the region's governor Konstantin Titov. It appears however, from the information made available, that there was little to suggest that the plant's problems are any closer to resolution. The meeting, which involved the heads of departments of the regional administration, representatives of the Russian Aerospace Agency, managers of SibAl, Board directors and managers of Aviakor. Started on a reasonably positive note according to Shapovalova, with reports that the wage arrears for the plant had been eliminated and that wages for workers at the plant had increased by 50%. The focus however, was on the future development of a number of business areas for the plant including: · Using Aviakor as a base for the upgrade of the Tu-95MS · More aggressive marketing of the plant's overhaul and upgrade of the Tu-154M · Leasing of Tu-154Ms · Development of the An-140 program · Participation in the Tu-334 program · Development of business away from the aerospace business In reality however, only upgrade work and diversification appear to have any real chance of being a success. The development of leasing structures for the Tu-154M particularly, is seen a possible way of securing future business. According to reports the plant was recently approached by Igor Leiko of Leader, a group of leasing companies, with the a proposal for leasing aircraft. The proposal centers initially on the completion of the 14 Tu-154 airframes currently at the plant and then leasing them to prospective operators using leases provided by the Leader Group.According to reports however, SibAl are less then enthusiastic about the proposal having some concerns about the ability of Leader to provide funding. They have however, agreed to a one aircraft deal as a pilot project. With both sides cooperating with the regional government in achieving unspecified changes in the regional leasing law to allow the development of the programme. In the area of non core developments the plant is continuing to develop promising areas in Russia. One industry that is currently experiencing a shortage of suppliers is automotive producers. Aviakor have therefore entered into discussions with a number of buyers for the provision of parts and components; including carmaker AvtoVAZ and Nizhni Novgord based bus producer Pavlovo Bus Plant (PAZ),where SibAl have recent taken control. These two directions appear at present, to be the only real short-term sources of income development for the plant. The production of the An-140 is still considered as a future project, despite earlier reports of tooling up for production. Requiring an investment of $10m to produce the first aircraft. To assist the plant Titov has proposed that the plant's 87m-rubles debt to the regional government could be reorganized, but Director of the Corporate Relations of SiBal, Andrey Konstantinov, made it clear that this programme if it went ahead, was simply not large enough to resolve the plant's problems. For Yury Bardin, First Deputy General Manager of the RAA certain issues for the plant remained unresolved. Particularly the failure of the Russian government to provide financing for the development An-70 destined to be produced at the plant Bardin said he would endeavor to include the programme in the defense development plan currently being created. He did however, add that negotiations with China for assistance in the development, should be seen as a back up option and should not be treated as a sole source of finance as Bardin believes German interest in the programme was treated prior to the decision to go with the European solution earlier this year. It was suggested however, that interest from the Russian Ministry of Defence for the aircraft remained, although other sources have suggested that the MoD would rather spend its scarce resources extending the life of its existing Il-76 fleet through upgrade and re-engining, rather than purchasing the An-70. Nevertheless a group to review Russian government's stance on the programe was agreed by the RAA and Aviakor. The RAA also undertook to raise the issue of the plant's possible involvement in the upgrade of the Tu-95MS and the production of the TU-334. Although sources close to the company did not express a great deal of optimism about the chance of the plant becoming involved despite earlier reports that the plant would be producing the nose cone for the aircraft for RSK MiG. The situation of the plant was brought into stark focus after the meeting broke up according to sources, when one of the company's largest debtors Samaraenrgo, which is owed 30.3m rubles, cutoff steam supplies to the plant for two hours. Protesting at the lack of progress on restructuring the plant's debts, despite halting supplies to the plant on earlier occasions. Further difficulties may also appear with reports in the Moscow presss that the governemnt watchdog the Audit Chamber,has suggested that the plant's and other aerospace privatisations should be reviewed along with the Ulyanovsk based Aviastar. The suggestion being that the privatisations were unlawful actions by the representatives of Aviakor/Tupolev. Whether anything will come of the charges is the subject of much debate. As to date no privatisations have been reversed as a result of irregularities in Russia's shambolic privatisation process. The Audit Commsion has however, been charged by Prsident Putin along with the Security Council to look at the condition and future of the industry.

Article ID: 2115