Evaluation underway of a joint US-Russian project (710 words)

Published: 4/18/2001

Boeing and the Russian Aerospace Agency (RAKA) have signed an agreement covering long term general cooperation in aerospace matters related to a number of space and aerospace projects including the development of the Russian polar ATC system. The reports of the discussions are couched in generally unspecific terms, but appear to reflect areas that Boeing has had involvement in Russia for some time, including aircraft upgrade. Where Boeing has been working closely with Ilyushin in the redesign of Boeing aircraft for cargo use and what is described as joint development of civilian aircraft, but probably more accurately contract design work for the underutilized design bureaux, particularly the 3,500 strong Ilyushin bureau. The agreements appear to be a fairly straightforward continuation of discussions that took place between Harry Stonecipher, the CEO of Boeing who visited Russia in June of 2000. Currently the Seattle aerospace company employs 70 individual in its Moscow offices, but has an extensive network of associations encompassing according to reports 500 scientists and engineers in 7 Russian cities. Ongoing programmes include a new rest cabin for the 777, improvement to the 757s pressure deck and the 767-cargo conversion. The value of the work in unclear, but some reports has put it at $1 billion for all the outstanding contracts. The most interesting development to come out what was largely a PR exercise, were reports of further Boeing involvement in the aerospace industry through the development of an aircraft in a key market segment of regional jets in the 50-80 seat airliners with a range of 2000 km. Sukhoi's ill fated dalliance with Alliance Aircraft has already identified this as a potentially interesting category for the industry and recent reports have suggested that Sukhoi remains interested and had conducted discussions with Brazilian producer Embraer concerning the production of aircraft in Russia. The General Director of Sukhoi, Mikhail Pogosyan however, remained silent about any possible cooperation with Boeing, although he re-iterated his interest in a regional jet as recently as March and stated that the company was discussing such a project with a number of industrial partners. Boeing Chairman Phil Condit however, was less restrained and was quoted as saying that he believed the development of a regional jet under the framework agreement represented a good opportunity for the combination Russian aerospace skills with Boeing commercial skills and could be an interesting programme. Although he did add that the market still had to be investigated. Boeing's most likely partner in the enterprise seems likely to be Sukhoi, with whom they retain an active discussion on the subject of a supersonic business jet. Sukhoi is also probably the only Russian producer with sufficient funds to finance its part in such a collaborative programme, although funding of its current civilian project, the twin turboprop S-80 is reported to be patchy. At the time of the company's involvement with the Alliance Aircraft Company, Sukhoi was also reluctant to share risk. In hindsight this has proved to be a fortuitous decision and perhaps the quality of the current potential partner is somewhat higher. For Boeing, lacking an aircraft in the class after abandoning the 717-300. A Russian cooperative programme could potentially give them a relatively “cheap” entrée into the segment and access to what could be a major market within Russia, with Aeroflot already identifying it as one of the areas of the most pressing need. As to the size of the market, the usual group of analysts claims that the market could be as large as 600 aircraft within Russia and the CIS. This is unlikely to be the case, as the replacement of older types will rarely be on a one for one basis, which appears to be the logic of most estimates. It is clear however, that regional aircraft represent the most attractive potential segment for the Russian aerospace industry for both domestic and international markets given the age of the existing fleets and the need for larger carriers to gather passengers. Deputy Prime Minister Klebanov says that if the programme does get off the ground it will take 5 years, and that feasibility studies are already underway with Boeing. Although he did not say who had been designated the Russian partner.The Americans committment to the Russian industry is undoubtedly encouraged by the recent agreements with EADS and active involvement can only help defuse the increasingly protectionist stance being taken by the Russian authorities, assisting Boeing's efforts to sell its products in Russia.

Article ID: 2494