Return to original post at Perm suggests merger is far from imminent (398 words)

Published: 6/28/2001

Despite the recent discussions relating to the restructuring of the aero engine industry, the first companies to bite the bullet of merger - design bureau OAO Aviadvigatel and Perm Motors (PMZ) - may be finding the process more difficult than initially expected, having made the first step towards merger in May 2000, with the creation of a combined senior management team of Chairman and General Director for the two entities. Since that point, reports have suggested that enthusiasm for the concept has cooled, with merger a more protracted outcome of combined management. It has now been announced that Yury Reshetnikov, joint General Director of Aviadvigatel and PMZ, is to give up his responsibility for the design bureau and focus solely on his original post of General Director of PMZ. The move has reportedly been made at his own request. Explaining his decision, Reshetnikov said he had resigned to focus on the management of PMZ and the “ technical decisions” that have to be made ahead of merger with Aviadvigatel. Despite his change of responsibility, Reshetnikov thinks that the merger of the designer and producer is required to secure the success of gas turbine production in Perm. He considers that he has to devote time in resolving these issues at PMZ. Reshetnikov also emphasised that, with the support of shareholders, it will necessary to develop a smooth transition to the next generation of management. The board of Aviadvigatel, having accepted the resignation of Reshetnikov, appointed Alexander Inozemtsev, General Designer at OAO Aviadvigatel, as his replacement. The presence of a number of powerful shareholders at PMZ, including the state, make it tempting to see this change of post as a sign of schism between the shareholders of the two businesses. But, for the meantime at least, Valentin Stepankov remains Chairman of the two entities and this suggests that the process remains intact and that this latest development may simply be a genuine effort on the part of the management to ensure that PMZ accepts the changes. Equally, Perm has come under considerable criticism over the quality of its product over the last few months and this may be an attempt to address the problem, particularly as the emergence of the potential leasing structure could considerably increase demand for the plant's products.

Article ID: 2617