New entity still to be housed within restructuring plan (330 words)

Published: 5/22/2001

Rybinsk Motors and the Lyulka-Saturn Design Bureau have finalised the terms of an expected merger of the two entities into an integrated design and production company. The merger should be legally concluded by the autumn, according to the companies. The name of the new concern is reported to be Saturn and, as expected, it will be 37% owned by the state. In late April, shareholders of the respective companies approved the move. The two companies were recently given contract, along with UMPO, to develop the new Al-41F engines for the fifth generation fighter. It is still not clear just how the new company will fit into the industry restructuring plan, which is believed to include a new holding structure for engine design and production. To date, details are sketchy of the restructuring, outside the larger entities in aircraft production and design. There are reports of the creation of six or seven groupings encompassing the rest of the industry, covering 316 companies, including TsAGI and the other major development entities. Among the aircraft designers and producers, Myasishchev is in the Sukhoi led SVSK-2 while its associated factory, Sokol, is linked with MiG in SVSK-1, while TANTK Beriev with Sukhoi in SVSK-2, given its close association with IAPO. With both Sokol and Myasishchev having the support of the successful Kaskol industrial group it is difficult to interpret how this relationship might continue given the split between the two entities. Particularly given the joint stock status of some of the entities, the state clearly intends to reverse some of its disposals of the last ten years, such as Lyulka-Saturn, in which its holdings fell to a negligible level after 1991. Past experience suggests, however, that the evolution of such structures has been that the announcement of a plan is by no means the end of the story.

Article ID: 2548