Ambitious timetable set for contracts worth €2.1 billion (659 words)

Published: 7/4/2001

On 2nd July, in the presence of President Putin and French President Jacques Chirac, EADS and Russia's aerospace agency (RAKA) signed a framework agreement for contracts valued at €2.1 billion over a 10-year period in over 50 programmes. The agreement follows the Memorandum of Understanding signed in December 2000 between the two parties, which was recently followed up in April during the state visit in April of German Chancellor Schroeder to St Petersburg, and has been described by Philippe Camus, CEO of EADS, as “a strategic partnership”. According to EADS, now that the framework agreements are in place, the company can start dealing directly with aerospace companies, having previously negotiated principally with RAKA and so begin to develop the basis of contracts and establish capability and pricing. Gregor Von Kurzel, spokesman for EADS, said that some of the contracts might be signed before the end of the year. EADS is clearly wasting no time in getting down to the hard work of negotiating the contracts, given that it now has direct access to the companies involved and making Russia into what Camus has described as a “major industrial partner”. The areas of discussion are reported to include work on the A-320 airframe - in addition to design work - and the production of parts for the A-330/340 family. There are also initial indications of discussions relating to work on the A-380 programme that is valued at €798m, and covers floor panels for the A-380-800F freighter, as well as titanium and aluminum arches, parts in the empennage, ribs and high temperature elements of the aircraft's systems such as “pipelines”. While no specific suppliers have not been mentioned, one particular aspect of the agreement, the development of the landing gear for the A-400M, suggests that Gidromash, based in Nizhni Novgorod, could get a substantial part of the reported €111m earmarked for the aircraft's LG and engine attachments. Vladimir Luzyanin, President of Gidromash, has hinted that the company may get the contract for the complete landing gear system. This seems an unlikely scenario, according to sources within Gidromash's facility, which is already producing titanium and other components for the A-320's LG and airframe. They claim that the company lacks the resources to undertake such a commitment, lacking either the working capital or the required industrial certification. Gidromash is, however, nonetheless happy with what is obviously a considerable improvement on its previous role as a semi-finished components producer for Western makers. The reason for the specific involvement in the A-400M in what appears to be a major system role is presumably a tradeoff: in part, to compensate for the failure of the Ukrainian/Russian An-70 to be adopted by the Germans, despite considerable lobbying from President Putin. DASA particularly made a considerable commitment to the An-7X candidacy and is reported to have only abandoned the aircraft when CASA, its new partner in EADS, made it clear it wished to participate in the A-400M programme. To coordinate its Russian design efforts, Airbus will replicate the investment of Boeing and set up a design centre in Moscow employing 150 Russian engineers. The Mi-38 helicopter joint venture between Eurocopter and Mil is also a beneficiary of the agreement, with an undertaking by EADS to continue to support the programme. What this means is not entirely clear, as the programme has largely stalled of late, owing to lack of funding. Mil has commented, however, that it believes the agreement will keep the programme “moving along” and reports have suggested investments of €160m - a considerable improvement on the speculation in the middle of 2000 that Eurocopter might withdraw from the Euromil programme, amid claims from senior executives at Kazan Helicopters that little had been contributed by the French. The size of the proposed deals appears to be considerably smaller than the $3.2 billion reported in April by the German press, after the Russo-German summit

Article ID: 2618