Exclusion from new aerospace groupings and management struggles combine to threaten producer (763 words)

Published: 5/23/2001

The new Russian aerospace groupings contain a large number of notable omissions, such as OAO Taganrog Aviation (Tavia), owned by its employees, along with the state and Tupolev. Over the last few years, the plant has suffered a general decline in its business, as its lack of working capital has made it increasingly unattractive to partners and resulted in a failure to secure new work, such as the production of the Be-200, that went to IAPO, despite Tavia's proximity to Beriev. The loss was attributed to the strength of IAPO finances through fighter exports and, according to Tavia, greater lobbying muscle with the Ministry of Emergency Situations, the aircraft's first customer. The plant was also originally designated as a production plant for the Tu-334, but work stopped in 1997, owing to lack of funds and the plant has received no more work, despite OAO Tupolev's 44% stake. Hopes of reviving interest in the production of the Be-32K - a twin turboprop multipurpose aircraft that first flew in 1967 - have emerged on a number of occasions, from within Beriev, Tavia and the JV marketing company, ZAO Mercury, but have come to naught. Despite the aircraft's price being half that of the An-38, potential buyers are unable to raise the financing and state orders from the Border Guards, particularly, have failed to materialise. In the last few years, the plant's aerospace (as opposed to boat building) work has come from the overhaul of Tu-142 Bear strategic bombers for India. It currently has a single aircraft for overhaul, scheduled for completion in June and is set to receive a further aircraft in September. The plant was earmarked for the production of a variant of the A-50 AWACS: the A-501 (converted from Il-76s) aircraft for China in 1999. The contract, however, later evaporated after US objections to the inclusion of Israeli radar in the aircraft. The lack of business has done little to dampen predatory interest in the company and it is currently embroiled in a struggle for control that threatens it with potential closure. Earlier this year, a group of investors acquired a stake in the company and recruited the support of some of the plant's senior management and local officials, for a plan to use the plant's runway, capable of handling aircraft as large as the An-124-100, as the basis of a new international airport for the city of Taganrog, situated on the Sea of Azov. According to Stanislav Tolmachev spokesman for Tavia, since the company's AGM was postponed by court order in March, pending the resolution of disagreements among shareholders, little has changed, despite his claim that the group of troublemaking shareholders constitutes less than 2% of Tavia's capital. Tolmachev alleges that the group has sought to submit its candidate for the position of the plant's General Director and also to gain a seat on the company's board. He also accuses the group of investors of acquiring the 2% holding in the weeks before the AGM, with the ironic effect of pushing the Tavia stock price from 150 to 350 rubles: an action that has undoubtedly endeared them to the plant's employees who own 25-30% of the company and are reported to be the sources of the group's shares. The Rostov Arbitrage Court has recently postponed the AGM yet again, with a new hearing scheduled for 28th and 30th May, when the two sides, headed by the current General Director and the plant's head of engineering, seek to resolve the situation. According to Tolmachev, the incoming group of shareholders acquired and stripped three companies prior to descending on Tavia. The current management is, therefore, quite rightly concerned that this fate awaits Tavia or, probably more importantly, their jobs. In addition to the support of the head of engineering, the new shareholders are reported to have the backing of the mayor of Taganrog for the plan to build an international airport on the Tavia site. The future of the plant as an aerospace enterprise, with or without the airport, is still decidedly rocky. Its omission from the new aerospace structures suggests that it will not get further government orders, given that Yury Koptev, General Director of the Russian Aerospace Agency (RAKA) has implied that such orders would be the province of the new integrate groupings. Recent comments made by Ilya Klebanov, Deputy Prime Minister also made it clear that enterprises outside of the new groupings would lose state orders and be sold off to the highest bidder.

Article ID: 2553