PARIS — Will the Russian bear ever truly fly again? Russia is trying to revive a once-booming aviation industry that fell into disrepair in the 1990s. First the Russian government threw all of its plane-building companies and assets into the United Aircraft Corporation in 2006, which was followed by promises in 2007 of $250 billion worth of plane contracts by 2025. Now, another key part of Russia’s bid to re-conquer the commercial skies made its debut at the Paris Air Show on Monday: the Sukhoi Superjet-100.
It was the first appearance outside Russia for the regional jet, which exists in both 78-seat and 98-seat formats. Sukhoi Chief Executive Mikhail Pogosyan told Forbes that the aim of the Superjet-100’s debut in Paris was partly to “accumulate new orders,” and hinted that more deals with domestic Russian carriers would be announced Tuesday.
But international reaction to the Superjet-100 has so far been lukewarm. Despite teaming up with the more experienced Italian company Finmeccanica ( FINMF – news – people ) to market the plane internationally, only three international airlines have officially put in orders: Armenia’s Armavia, Italian carrier ItAli and Hungarian airline Malev.
Malev’s interest was announced on Monday at the Paris Air Show, clearly timed for maximum impact, but it still looked rather feeble: The airline only signed a letter of intent, not even a firm order, for 30 aircraft worth $1 billion. Its chief executive, Martin Gauss, said that Malev had yet to raise financing for the order, though he expected it would involve a consortium of banks.
Malev is not exactly a tough customer for Russia to win over. The airline is 49%-owned by Russia’s Vneshekonombank, a state-owned lender, which just happens to also be a 5% shareholder of United Aircraft Corporation. Forbes asked Gauss whether there had been any political or shareholder pressure to sign with Sukhoi, to which he replied, “No.” When asked if Malev really believed that the Sukhoi was the best regional jet available on the market today, Gauss replied: “From what we’ve found out so far, yes.”
Analysts disagree. Teal Group’s Richard Aboulafia has said that the design of the Superjet-100 itself offers nothing new, at least nothing that improves on rival offerings from Canada’s Bombardier or Brazil’s Embraer. These two jet makers currently dominate the regional jet market, and although this market segment may offer some growth in the future, only Japan’s Mitsubishi looks set to capture some of it from the incumbents with its MRJ jet. (See “Asia’s Aviation Upstarts.”)
Sukhoi’s Pogosyan is still confident that the company will cover all of Russia’s domestic regional-jet needs at least, and says that Russia’s trade tariffs favor its chances relative to outside suppliers. As for whether the big guns Airbus and Boeing ( BA – news – people ) should be afraid of a new competitor eventually coming onto the scene, Pogosyan cited Boeing’s own CEO, James McNerney, and said: “The duopoly can’t last forever.”
Source: http://www.forbes.com/2009/06/15/russia-sukhoi-jets-markets-equity-paris-airshow.html?partner=yahootix