Part of a 6-12 aircraft acquisition programme through until 2007 (593 words)

Published: 3/29/2001

According to Volga Dnepr spokesman Alexander Stepanenko, the airline is in the process of preparing supporting loan documentation for the World Bank's International Finance Corporation (IFC). For consideration by the IFC's board in early April, in the hope of receiving financing for the purchase of two additional An-124-100s and engines later this year. While Stepanenko was reluctant to disclose the possible terms and size of the loans, it can probably be safely assumed that the terms will be better than earlier financing received from Sberbank for completion of the most recent An-124 for VD and likely to exceed $50m. Given the recent pricing of deals for An-124 was the $6m paid by Air Foyle for an aircraft requiring modernization after sitting on the tarmac at Maastricht for three years. It is unclear exactly what the price of new aircraft would be, but it is likely to be considerably less than the An-124's reported original launch cost of $90m and probably around $40m. The timetable for deliveries would be one new aircraft this year between November and December supplied by Ulyanovsk based Aviastar and a second aircraft from another source. According to the airline the source of the second aircraft will be the Russian Air Force, suggesting that the aircraft, although delivered in November -December, may take sometime to come into service judging by the experience of a recent buyer of Russian Air Force An-124s Polyot Airlines. That according to spokesman Leonid Shorobokov, are requiring 8-9 months of work at Ulyanovsk to meet their own standards, which are reported be fairly basic and do not involve compliance with equipment requirements within ECAS. The four Polyot Airlines An-124s with an average age of ten years were bought in reportedly poor condition, having suffered extensive cannibalization and according to Polyot the effects of being parked outside for a few years. Neglect that resulted in the aircraft requiring extensive work prior being shuttled from the air base at Bryansk, where they were stationed, to Ulyanovsk for modernization. Current estimates suggest that the first two aircraft will not be available until June and the other two aircraft, having been delivered in September 2000 and February 2001, until May 2002. According to Stepanenko the new aircraft purchases are part of a schedule of aircraft acquisitions that will see the airline buying 1-2 Ruslans a year through till 2005-2007. Little mention has been made by the airline of the long term funding of this programme, but it seems likely that the airline will have to seek both further debt and potentially equity if it is going to continue buying to the extent outlined. It would appear that the Russian Air Force might become the main source of aircraft for the various operators in the near future. The supply of 55 airframes built before 1995 is petering out, with 51 reported to have flown. The only option other than the air force, would be a restart of production at Ulyanovsk and Kiev , which would be an expensive undertaking, although recent aggressive lobbying for the move of the An-70 to Ulyanovsk from Samara on the basis of economies of scale, suggests it is an option that has been reviewed. The Russian Air Force's remaining 16 aircraft (including the VD aircraft) may therefore be very attractive despite the questionable condition .It is unclear however, whether the Russian government would wish to lose control of its strategic lift capability completely or whether it views the current fleet as being no longer essential to what of necessity is an increasingly regional defense focus.

Article ID: 2448