RUSSIAN AIRCRAFT MANUFACTURERS WILL MERGE INTO UNIFIED CORPORATION

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MOSCOW, October 28 (RIA Novosti) According to provisions of the draft concept of the creation of a unified aircraft corporation, Russian aircraft manufacturers will be merged into one corporation until the end of 2007, announced director of the defense industry department at the RF Ministry of Industry and Energy Yuriy Koptev during a press conference on Thursday.

He mentioned that the Cabinet would make the decision on the document in November.

According to the concept, the unified aircraft company will be incorporated, with the state holding more that 70 percent of shares.

The corporation will be divided to several business units: combat, transport and civil aviation, and also a unit manufacturing component parts.

"The state will have a not less that 51 percent stake in the company manufacturing combat aircraft, and possibly controlling blocs in the rest of the units. This way we plan to attract private investors to Russian aircraft manufacturing industry," said Mr. Koptev.

He mentioned that the unified corporation will include, in particular, such companies as OAO Yakovlev Test and Design Bureau, aircraft manufacturing holding Sukhoi, International aircraft manufacturing company Ilyushin, OAO Tupolev, Russian aircraft manufacturing corporation MiG, and Research and Production corporation Irkut.

The merger "will be conducted carefully, on a stage-by-stage basis." Mr. Koptev said.

"You have to realize that these companies have various forms of ownership, different economic and financial potential, and, in addition, the manufacturers of aircraft - absolutely different model lines," the head of the department stressed.

He also said that the priority goal of the unified company would be to maintain the presence of Russia on the global market of combat aircraft and to penetrate the global market of commercial aviation.

Meanwhile, it is planned to convert production lines at several enterprises and even close down some production units, Mr. Koptev added.

Russian aircraft manufacturing industry employs 500,000 people. The production volume is estimated at $6-6.5 billion. In Mr. Koptev's opinion, the unified company will have to increase the production volume while reducing the number of employees.

At the same time, the state support of the industry must reach $1.5-1.7 billion, asserts Mr. Koptev, because the current amount of state support -- $100 million - is "definitely not enough." Mr. Koptev believes that the state support might be allocated not only in the form of direct financing, but also through state investments, favorable tax and custom conditions.

"If we do not adopt such a decision, in 5 years the country will have to use Boeing and Airbus aircraft to transport passengers, and we will be forced to close down all our manufacturers of civil aircraft. And later the same will inevitably happen to our manufacturers of military aircraft," he stated.

According to Mr. Koptev, by 2013, Russia will be manufacturing up to 10 percent of long-range airliners in the world. "We estimate that by 2013 the global production of long-range aircraft will reach 1,200-1,300 planes a year. Our goal is to produce 120 of those," said Mr. Koptev.

He underlined that such production output will help the modernization of the industry and the creation of the unified aircraft manufacturing company.

Answering the question about the current Russian share on the global market of long-range aircraft posed by RIA Novosti correspondent, Mr. Koptev responded: "Make your own comparison. Last year we manufactured 9 aircraft, Boeing - 292 aicraft, and Airbus - 305 aircraft."

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