EADS/RAKA agreement likely to include 36 aircraft (469 words)

Published: 7/5/2001

There is still one aspect of the recent EADS deal with the Russian Aerospace Agency (RAKA) that awaits clarification: namely, the offset deals reported in the Russian press, for 36 A-320s over a ten year period, as being the price of the Russian involvement in the launching of the TsSKB Progress Soyuz from the Kourou Space Centre in French Guyana. A decision on this is expected to be made by the European Space Agency in December. According to Klaus Dieter Bergner, EADS Senior VP, a positive decision could well mean that the Soyuz will be paired with the heavier Ariane-5 for commercial launches by the ESA. The Soyuz - marketed by the Starsem JV - already has 10 successful launches from Baikonur, since its first in 1996. Sources estimate that the investment by the ESA in a launch facility is likely to be $250m, with a target of 2005 for the first launch. While Yury Koptev, Director General of RAKA, accepts that there are no such clauses in the framework agreement relating to the acquisition of A-320s, he inferred that such a deal was an implicit cost of participation and promptly confirmed the deal by saying it was for 32 aircraft and not the reported 36. The major airlines will welcome the availability of this number of aircraft, assuming exemption from tariff duties. Aeroflot is especially eager to adopt foreign aircraft without the offsetting purchase of domestic equipment that has recently become a point of considerable political tension for the airline as well as cause for concern, given its dissatisfaction with the Russian aircraft available to it. The producers may be less enthusiastic, given that the A-320 competes head to head with the Tu-204. However, some element of offset may be involved in at least the aircraft's engines with reports of further local participation by Rybinsk Motors (RM) in the production of the CFM-56 and suggestions that the commitment could be for as much as 20% of the engine. While Aviastar, in particular, is unable to gear up its production of the Tu-204 significantly from present levels, the possibility of access to so many aircraft with a lease structure will cause considerable reform. It seems clear that RAKA believes that opposition can be overcome by local involvement in Airbus production, already outlined in principle. While welcoming the integration of the Russian industry in the global supply networks, there is little doubt that RAKA's low key approach to the issue suggests an expectation of hurdles to cross in the form of those in the aerospace industry who still believe that Russian producers should be competing with Airbus and Boeing, rather than being valued and well rewarded partners, with the commensurate benefits of assuring the industry a future.

Article ID: 2624