Sukhoi Super Jet: the great white hope of the Russian aircraft industry

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MOSCOW. (RIA Novosti economic commentator Mikhail Khmelev) - Russia's civilian aircraft industry collapsed with much of the rest of its economy after the break-up of the Soviet Union.

Now, the country is hoping to gain a foothold on the global market for short-haul passenger aircraft, competing with the industry's two current titans, Canada's Bombardier and Brazil's Embraer.

Of all the projects it has to choose from, the Russian government has opted to finance the Sukhoi Super Jet (SSJ)-100 program. The United Aircraft Corporation, which brings together all Russia's aviation production facilities, plans to start mass producing SSJ-100 planes in the next three years.

On July 10, the European Bank for Reconstruction and Development (EBRD) approved a low-interest credit line to assist the Sukhoi Civil Aircraft company in implementing the SSJ-100 program.

The project has attracted so much interest partly because the SSJ-100 could be used to promote other Russian aircraft on the global market.

Short-haul airliners seating up to 100 passengers are the most competitive and promising segment of the Russian aircraft industry, because only Bombardier and Embraer can compete with local producers on the country's domestic market. Russian companies, however, are still far behind their rivals on the international market.

This can primarily be explained by the fact that foreign customers simply do not like Russian airliners. Consequently, the Tupolev Tu-334 and Antonov An-148 planes, which were tested and certified long ago and can now be mass-produced, are still ordered only by Russian airlines and by Iran, which requires aircraft that do not have U.S.-made components.

However, the SSJ-100, which is being developed by Sukhoi Civil Aircraft in conjunction with foreign parts suppliers, could change the situation overnight. The American company B/E Aerospace will provide world-class interiors. The joint venture PowerJet, involving France's Snecma Moteurs, is developing the SSJ-100's engines. And U.S. aviation giant Boeing is providing technical consulting services.

Another joint venture involving Italian aerospace giant Finmeccanica, due to be established on July 15, will sell the new airliner on the European market and will also provide post-sale support.

The SSJ-100 represents an important step forward for the Russian aircraft industry because it is the country's first "post-Soviet" plane. The participation in the project of so many well-known foreign companies should give investors confidence in its success.

Most importantly, the complete transparency of this $1.4 billion program has given investors the needed insight into its financial aspects. The Russian government will provide about 8.7 billion rubles (about 247.8 million euros at the current exchange rate), and the EBRD will allocate 100 million euros in the next 10 years. Alenia Aeronautica, a Finmeccanica subsidiary, will buy a 25% stake plus one share in Sukhoi Civil Aircraft, and the Italian partner has convinced the national carrier, Alitalia, to buy 10 SSJ-100s.

It is hardly surprising that the government is betting on the SSJ-100. The United Aircraft Corporation, which is concentrating its efforts on this project, has put off the production of An-148 planes, and the Tu-334 will be mass-produced only if there is sufficient domestic demand.

Although Aeroflot Russian Airlines, the country's state-controlled flag carrier, has ordered 45 SSJ-100s, and the first deliveries are scheduled for 2008, their prototypes remain grounded. However, static tests of the SSJ-100's airframe began on July 9.

Russia's Dalavia airline, its leasing company Ilyushin Finance and Alitalia have ordered six, 10 and 10, respectively, of the SSJ-100-95, which seats 95 passengers. This is the most popular version of the Super Jet even though, with a price tag of $25-$28 million, it is also the most expensive. This makes for a total of 71 orders for SSJ-100s. Ten and 25 planes will be delivered in 2008 and 2009, respectively, and the rest will arrive in 2010.

In addition to those mentioned above, 29 more planes may be ordered soon. The United Aircraft Corporation expects other European airlines to follow Alitalia's lead and to order $2 billion worth of SSJ-100s by 2015. The success of the new airliner could pave the way for other Russian planes to enter the global market.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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