Potential advantage for both designer and producer (379 words)

Published: 4/5/2001

According to the Russian daily Vedomosti, two of Russia's aero engine entities, producer Rybinsk Motors and designer Lyulka-Saturn, will merge in May 2001, if they receive the approval of their respective shareholders' meetings later this month. Rybinsk Motors is owned by the Ministry of State Property (37%) and other shareholders including, OAO TDI (19.54%), OOO Techincom (14.91%) and OOO Tenako (9.13%). Lyulka-Saturn has no state holdings. The companies are however, not being particularly forthcoming and Andrey Scherbovitch-Vetcher, Rybinsk Motors' spokesman, would only say that the possibility of a merger was one of the issues that would be discussed at the company's forthcoming shareholders' meeting. He did say that the state would hold 37% of any new venture, which given that it holds none of Lyulka-Saturn's equity appears to be very generous. It does however; reflect the ministry's historical stance of being happy to see restructuring in the industry, as long its interests were not diluted. The demand that their holdings are not diluted, appears all the more strange, given that the Lyulka-designed AL-31F fighter engine earns considerable revenues from exports as the power plant for the Su-27 family of fighters. Other actual and proposed aerospace restructurings have left the design bureau with, what appears to be, a poor deal. Recent verification of this came in the form of the creation of the Tupolev company, giving Aviastar the lion's share of the equity in the new structure and leaving the bureau with a relatively minor holding (reportedly much to its annoyance). The motivation for the merger is not difficult to grasp, given closer relations between Perm and Aviadvigatel and a general acceptance that a good model for an ongoing aerospace structure is the combination of a designer and producer. Rybinsk, having recently talked about producing the PS-90, may be attracted by the possibility of funding and contracts for the new generation fighter engine, the AL-41F. The future of the programme is by no means decided, although the Rybinsk plant, UMPO and Salyut, were announced as serial producers of the engine recently. Having an integrated design, production and structure may also attract Lyulka giving, as it does, the opportunity to share in the success of its designs.

Article ID: 2464