Ailing MiG Corp. to get $308 mln under state contract, other aid

MOSCOW, February 11 (RIA Novosti) - The MiG aircraft-building corporation will receive 11 billion rubles ($308 million) in the first quarter of the year as part of a 17.3 billion-ruble ($485 million) state defense contract, the Russian prime minister said on Wednesday.

Vladimir Putin has also signed a resolution allocating a further 15 billion rubles ($417 million) in federal budget funds to the corporation.

"The funds will be used to increase charter capital through an issue of additional shares," Putin said.

Putin said that the MiG corporation had sustained losses of some 11 billion rubles in 2008, with its debt running at 44.8 billion rubles ($1.25 billion).

"Losses totaled some 11 billion rubles last year, and the overall debt is 44.8 billion rubles," he said at a meeting with MiG executives.

He added that there would be no cuts in Russia's state defense procurements in 2009.

"Yesterday, after a thorough analysis of budget capabilities, we made in effect a final decision not to cut state defense contracts significantly," Putin said.

Apart from the ongoing financial crisis, the MiG corporation has been hit by Algeria's decision to tear up a $1.28 billion contract to buy 34 MiG-29s, signed in 2006, over the airplanes' "inferior quality." The 15 planes delivered were sent back to Russia.

The corporation also has a substantial debt to suppliers, in particular engine makers and missile manufacturers - reportedly more than $80 million.

Last year, MiG, along with other "strategic" companies, was promised funding through the government's anti-crisis package, specifically firm production orders from the Russian Air Force.

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