A interesting little bit I found.
May 29, 2008
Corp. Pres. Says MiG No Prob.
// The head of MiG talks about joining the united corporation and the world market for Russian planes
Belov on MiG and its future
The Russian airplane maker MiG was converted from a federal state unitary enterprise to a joint stock society (OAO) in March, and it is to be made part of the United Aircraft Corp. (UAC), and one of its chief assets, by the end of the year. That process is being guided by MiG’s new general director, Anatoly Belov, who replaced UAC president Alexey Fedorov in that post. In his first interview in his new capacity, Belov tells Kommersant about the state of affairs at MiG, export contracts and reorganization plans.
When will MiG Corp. join UAC? The date has been moved back more than once.
This year, I think. Ernest & Young is expected to complete the assessment of the corporation in June, and then the usual integration process is planned.
How much will the complications with the contract to deliver fighter jets to Algeria influence the assessment? [A contract for 28 MiG-29SMT and 6 MiG-29UB jets was signed in March 2006, but the first 15 were returned by Algeria due to complaints about their condition.] MiG has considerable debts from 2007.
The debts were accrued mainly because of the problems with the Algerian contract. Nonetheless, the planes were produced and, consequently, are among the company’s assets. Therefore, I think the value of the company will not be significantly reduced. And we are in intensive negotiations for the sale of those planes.
The Algerian Air Force paid $250 million up front for those planes. Are they demanded the return of their money?
The discussion of the procedure to reverse the contract is still ahead. That is when questions of mutual settlement will come up.
At UAC, they say the Russian Air Force is considering obtaining the planes Algeria returned.
The Air Force is interested in all 34 MiG-29SMT’s planned for delivery to Algeria. A Defense Ministry commission inspected them and came to a positive conclusion about the quality of their assembly. Air Force pilots have tested the planes’ various modes in the air and responded well to them.
If the Defense Ministry buys them, will the price be lower than in the contract with Algeria?
It is expected that the price will be somewhat lower than the export price.
The Russian Air Force does not take planes with foreign avionics. Will you have to change the planes’ insides?
Yes, in that case, minor changes will have to be made. They will be insubstantial and will not affect the deliver cost or schedule.
Are there export offers on the planes?
Yes, there have been enquiries, some from our traditional partners. We are prepared to consider them subsequent to the delivery of the Russian Air Force.
The Russian side offered Algeria more modern MiG-29M2 or MiG-35’s in exchange. Is that offer still in force?
MiG has made the offer. The decision is the Algerian side’s.
What is MiG’s portfolio of orders now?
About $4 billion plus $2.5 billion in options in the period up to 2010-2011. And the market is not exhausted. We add quite solid sums to that portfolio every year. In the next few years, we will promote four planes – the MiG-29SMT, MiG-29K/KUB, MiG-29M/M2 and MiG-35.
Can MiG’s share of the world market be estimated?
Of the total number of jet fighters produced in the world, about 70 percent of them are light- or medium-weight models. That is the niche MiG works in and it has good prospects there. Of course, the production rates of our competitors are higher than ours, we have already started to regain our position on the market, looking to the potential of the company and state support.
How does the falling exchange rate of the dollar affect MiG exports?
It’s a problem. It affects the economics of the corporation and creates complications not only for MiG, but for our partners as well. The Federal Military-Technical Cooperation Service and Rosoboronexport, naturally, are aware of this and are negotiating with our clients to solve it.
How is the Indian tender for the purchase of 126 fighter jets that MiG is participating in? India has already extended it.
Only the deadline for filing the technical-commercial proposals was extended. By one month. We turned in all materials with Rosoboronexport within the deadline. The next stage is a demonstration of the equipment for the customer.
Considering India’s leisurely pace, do you expect the results of the tender soon?
India may change its plans, if necessary. But so far the process is coming along within the deadlines Delhi set at the very beginning.
Rosoboronexport is conducting negotiations with India on changing the price and deadlines on the contract to deliver the aircraft carrier Admiral Gorshkov. The contract for the delivery of the 16 MiG-29K/KUB planes includes an option to buy an additional lot of MiG’s for the ship. Can the delay with the Gorshkov interfere with those plans?
We discussed that question with the Indian side at a high level, and we were promised that the situation with the aircraft carrier would not affect our contract. In June, we will begin to train Indian pilots. In the next few months, we will hand over the first four planes to the Indian customer. They will be used for technical training for the flight and technical personnel. The other eight will be delivered by June 2009. We are waiting for information on contract deadlines from the Indian side.
A number of technical problems had to be solved during the modernization of the engine for the MiG-29K/KUB. Will that delay deliveries of those planes?
There are no serious difficulties. All of our partners’ schedules are being met. One plane is already completely ready and another is almost done.
Do the Indians plan to build a test range like Nitki in the Crimea to imitate the decks of an aircraft carrier?
They have such plans, and we will help the Indian Navy with it. In the nearest future, plans are to train Indian pilots to fly from regular airfields. In the long term, we will train pilots on an imitation aircraft carrier. Negotiations are underway with Ukraine about that.
There was an announcement in the press with references to the Indian Navy that, if the F-18 wins the tender for the 126 jet fighters, they will be delivered onto two aircraft carriers now being built alongside MiG-29K/KUB’s. How do you see that possibility?
Yes, I saw that the Indian Navy allegedly put forward such an initiative. We doubt that information. It’s not the first disinformation about the tender. As a rule, the Indian side disavows such reports.
MiG Corp. has signed a contract for the modernization of 63 MiG-29 jet fighters delivered to India earlier. What are the parameters of that contract?
The total cost is about $1 billion. The first planes should arrive in Russia in the coming months so that their future technical characteristics can be worked out. Then MiG will transfer the technology for their modernization to India. Our specialists will be sent to India to assist them and MiG will provide the Indian side with all necessary equipment. All the Indian Air Force MiG-29’s will be modernized, six of them in Russia and the rest in India.
It was announced at Le Bourget last year that there are customers for the MiG-29M/M2.
Yes, there are certain customers for the fighter.
And for the MiG-31?
We have made proposals, there are customers ready to buy, but we wouldn’t want to name those customers.
What are MiG Corp.’s perspectives on the Eastern European market?
We offer the countries where there are jets in the region several options for modernization: deep, medium and light. The choice of option depends on the country’s capability and tasks before MiG. A number of projects are already being implemented. For example, 12 MiG-29SD’s were recently handed over to the Slovakian Air Forces modernized to NATO standards and put into service.
Will purchases of MiG’s by the Russian Air Force increase?
There are no major changes planned in the state arms program through 2015, but now a new program is being prepared for 2010-2020. The MiG Corp. has several interesting offers that may be carried out as part of it.
Could the Air Force declare a tender for the development of light and medium fighters of the fifth generation soon?
I assume the one heavy fighter [now being developed by Sukhoi] will not fulfill all the tasks now before the Air Force. A plane of a lighter class is objectively necessary, so we continue to work in that area.
But that tender is only possible after 2015?
Why? The process can begin sooner. It’s a decision for the Russian government, Defense Ministry and the chief commander of the Air Force.
Does the corporation intend to continue the MiG-AT program? The Russian Air Force chose the Yak-130 as a training warplane and there are no orders for it on the international market.
The MiG-AT has participated in several training programs and it is premature to talk about the complete end of the program.
At the Moscow Airshow, MiG Corp. demonstrated the Skat drone. Does it have any chance of being included in the state weapons program?
We are counting on that.
Will OAO Chernyshev Moscow Heavy Industry Enterprise and OAO Klimov, MiG’s engine-building assets, be split off from MiG Corp., as previously planned?
Since MiG is entering the UAC, its management will hold negotiations with Oboronprom on incorporating Chernyshev and Kilmov into the engine-building holding. MiG is counting on receiving management of the stock in the Nizhny Novgorod Sokol, which will permit us to optimize out production programs.
Only the 38-percent state share package in Sokol belongs to UAC. Will MiG Corp. make a proposal to the private shareholder in Sokol to buy their packages?
That is being discussed now.
A year and a half or so ago, the possibility was being considered of ordering a wing for a MiG-29 produced by Sokol from Irkut or even Komsomolsk.
That was temporary, while Sokol recovered. The Nizhny Novgorod plant had a difficult period, but now it meets MiG Corp.’s demands.
How does MiG Corp. intend to reorganize its production capacities? How long will the facilities in Moscow be open?
MiG production is carried out in three facilities, in Moscow, Lukhovitsy and Nizhny Novgorod. We cannot get by without the Moscow facilities today. Plans to gradually cut down production in Moscow are being discussed with UAC now. But that would have to be done very cautiously, since several thousand people work here.
Which will be the main facility?
Both Sokol and Lukhovitsy will both be developed and the workload divided between them, including types of fighters.
The president signed a decree on February 20 on the creation of the National Aviation Center in Zhukovsky. When will MiG be able to transfer its engineering center to Zhukovsky?
We fully support that project, it is going in absolutely the right direction. As for the time, of course, plans have to be consolidated with Ilyushin, Tupolev, Irkut and Sukhoi. Our only desire is that the move not affect our production process, since MiG is one of the few integrated companies, uniting everything from planning to production.
At the end of March, there was talk at UAC about the possibility of a stopgap option – the construction of a new building at the production facility in the Khodinskoe Pole area [of Moscow] where the UAC engineering center and corporation’s headquarters could be located.
Highly technical problems associated with the placement of UAC and its services are being solved. Various options are being discussed, including the one you mention. Since MiG Corp. is still not part of UAC, I have not devoted a lot attention to it yet.
You came to MiG Corp. at a difficult moment connected with the Algerian contract. Why did you leave the prosperous Irkut Corp. for the problematic MiG?
I don’t consider MiG problematic. The situation at MiG reflected what has happened in all of the Russian aviation industry. They are the same problems, to greater or lesser degree. The most important of them had been solved through the efforts of the previous management: production reform had been begun, we participated in the Indian tender with planes from the new product line and the MiG-29K project had been brought to a successful end. I have no doubt that we will restore the authority of the MiG brand.
Interviewed by Alexandra Gritskova and Konstantin Lantratov
link
http://www.kommersant.com/p897204/r_1/aviation_industry/
May 29, 2008
Corp. Pres. Says MiG No Prob.
// The head of MiG talks about joining the united corporation and the world market for Russian planes
Belov on MiG and its future
The Russian airplane maker MiG was converted from a federal state unitary enterprise to a joint stock society (OAO) in March, and it is to be made part of the United Aircraft Corp. (UAC), and one of its chief assets, by the end of the year. That process is being guided by MiG’s new general director, Anatoly Belov, who replaced UAC president Alexey Fedorov in that post. In his first interview in his new capacity, Belov tells Kommersant about the state of affairs at MiG, export contracts and reorganization plans.
When will MiG Corp. join UAC? The date has been moved back more than once.
This year, I think. Ernest & Young is expected to complete the assessment of the corporation in June, and then the usual integration process is planned.
How much will the complications with the contract to deliver fighter jets to Algeria influence the assessment? [A contract for 28 MiG-29SMT and 6 MiG-29UB jets was signed in March 2006, but the first 15 were returned by Algeria due to complaints about their condition.] MiG has considerable debts from 2007.
The debts were accrued mainly because of the problems with the Algerian contract. Nonetheless, the planes were produced and, consequently, are among the company’s assets. Therefore, I think the value of the company will not be significantly reduced. And we are in intensive negotiations for the sale of those planes.
The Algerian Air Force paid $250 million up front for those planes. Are they demanded the return of their money?
The discussion of the procedure to reverse the contract is still ahead. That is when questions of mutual settlement will come up.
At UAC, they say the Russian Air Force is considering obtaining the planes Algeria returned.
The Air Force is interested in all 34 MiG-29SMT’s planned for delivery to Algeria. A Defense Ministry commission inspected them and came to a positive conclusion about the quality of their assembly. Air Force pilots have tested the planes’ various modes in the air and responded well to them.
If the Defense Ministry buys them, will the price be lower than in the contract with Algeria?
It is expected that the price will be somewhat lower than the export price.
The Russian Air Force does not take planes with foreign avionics. Will you have to change the planes’ insides?
Yes, in that case, minor changes will have to be made. They will be insubstantial and will not affect the deliver cost or schedule.
Are there export offers on the planes?
Yes, there have been enquiries, some from our traditional partners. We are prepared to consider them subsequent to the delivery of the Russian Air Force.
The Russian side offered Algeria more modern MiG-29M2 or MiG-35’s in exchange. Is that offer still in force?
MiG has made the offer. The decision is the Algerian side’s.
What is MiG’s portfolio of orders now?
About $4 billion plus $2.5 billion in options in the period up to 2010-2011. And the market is not exhausted. We add quite solid sums to that portfolio every year. In the next few years, we will promote four planes – the MiG-29SMT, MiG-29K/KUB, MiG-29M/M2 and MiG-35.
Can MiG’s share of the world market be estimated?
Of the total number of jet fighters produced in the world, about 70 percent of them are light- or medium-weight models. That is the niche MiG works in and it has good prospects there. Of course, the production rates of our competitors are higher than ours, we have already started to regain our position on the market, looking to the potential of the company and state support.
How does the falling exchange rate of the dollar affect MiG exports?
It’s a problem. It affects the economics of the corporation and creates complications not only for MiG, but for our partners as well. The Federal Military-Technical Cooperation Service and Rosoboronexport, naturally, are aware of this and are negotiating with our clients to solve it.
How is the Indian tender for the purchase of 126 fighter jets that MiG is participating in? India has already extended it.
Only the deadline for filing the technical-commercial proposals was extended. By one month. We turned in all materials with Rosoboronexport within the deadline. The next stage is a demonstration of the equipment for the customer.
Considering India’s leisurely pace, do you expect the results of the tender soon?
India may change its plans, if necessary. But so far the process is coming along within the deadlines Delhi set at the very beginning.
Rosoboronexport is conducting negotiations with India on changing the price and deadlines on the contract to deliver the aircraft carrier Admiral Gorshkov. The contract for the delivery of the 16 MiG-29K/KUB planes includes an option to buy an additional lot of MiG’s for the ship. Can the delay with the Gorshkov interfere with those plans?
We discussed that question with the Indian side at a high level, and we were promised that the situation with the aircraft carrier would not affect our contract. In June, we will begin to train Indian pilots. In the next few months, we will hand over the first four planes to the Indian customer. They will be used for technical training for the flight and technical personnel. The other eight will be delivered by June 2009. We are waiting for information on contract deadlines from the Indian side.
A number of technical problems had to be solved during the modernization of the engine for the MiG-29K/KUB. Will that delay deliveries of those planes?
There are no serious difficulties. All of our partners’ schedules are being met. One plane is already completely ready and another is almost done.
Do the Indians plan to build a test range like Nitki in the Crimea to imitate the decks of an aircraft carrier?
They have such plans, and we will help the Indian Navy with it. In the nearest future, plans are to train Indian pilots to fly from regular airfields. In the long term, we will train pilots on an imitation aircraft carrier. Negotiations are underway with Ukraine about that.
There was an announcement in the press with references to the Indian Navy that, if the F-18 wins the tender for the 126 jet fighters, they will be delivered onto two aircraft carriers now being built alongside MiG-29K/KUB’s. How do you see that possibility?
Yes, I saw that the Indian Navy allegedly put forward such an initiative. We doubt that information. It’s not the first disinformation about the tender. As a rule, the Indian side disavows such reports.
MiG Corp. has signed a contract for the modernization of 63 MiG-29 jet fighters delivered to India earlier. What are the parameters of that contract?
The total cost is about $1 billion. The first planes should arrive in Russia in the coming months so that their future technical characteristics can be worked out. Then MiG will transfer the technology for their modernization to India. Our specialists will be sent to India to assist them and MiG will provide the Indian side with all necessary equipment. All the Indian Air Force MiG-29’s will be modernized, six of them in Russia and the rest in India.
It was announced at Le Bourget last year that there are customers for the MiG-29M/M2.
Yes, there are certain customers for the fighter.
And for the MiG-31?
We have made proposals, there are customers ready to buy, but we wouldn’t want to name those customers.
What are MiG Corp.’s perspectives on the Eastern European market?
We offer the countries where there are jets in the region several options for modernization: deep, medium and light. The choice of option depends on the country’s capability and tasks before MiG. A number of projects are already being implemented. For example, 12 MiG-29SD’s were recently handed over to the Slovakian Air Forces modernized to NATO standards and put into service.
Will purchases of MiG’s by the Russian Air Force increase?
There are no major changes planned in the state arms program through 2015, but now a new program is being prepared for 2010-2020. The MiG Corp. has several interesting offers that may be carried out as part of it.
Could the Air Force declare a tender for the development of light and medium fighters of the fifth generation soon?
I assume the one heavy fighter [now being developed by Sukhoi] will not fulfill all the tasks now before the Air Force. A plane of a lighter class is objectively necessary, so we continue to work in that area.
But that tender is only possible after 2015?
Why? The process can begin sooner. It’s a decision for the Russian government, Defense Ministry and the chief commander of the Air Force.
Does the corporation intend to continue the MiG-AT program? The Russian Air Force chose the Yak-130 as a training warplane and there are no orders for it on the international market.
The MiG-AT has participated in several training programs and it is premature to talk about the complete end of the program.
At the Moscow Airshow, MiG Corp. demonstrated the Skat drone. Does it have any chance of being included in the state weapons program?
We are counting on that.
Will OAO Chernyshev Moscow Heavy Industry Enterprise and OAO Klimov, MiG’s engine-building assets, be split off from MiG Corp., as previously planned?
Since MiG is entering the UAC, its management will hold negotiations with Oboronprom on incorporating Chernyshev and Kilmov into the engine-building holding. MiG is counting on receiving management of the stock in the Nizhny Novgorod Sokol, which will permit us to optimize out production programs.
Only the 38-percent state share package in Sokol belongs to UAC. Will MiG Corp. make a proposal to the private shareholder in Sokol to buy their packages?
That is being discussed now.
A year and a half or so ago, the possibility was being considered of ordering a wing for a MiG-29 produced by Sokol from Irkut or even Komsomolsk.
That was temporary, while Sokol recovered. The Nizhny Novgorod plant had a difficult period, but now it meets MiG Corp.’s demands.
How does MiG Corp. intend to reorganize its production capacities? How long will the facilities in Moscow be open?
MiG production is carried out in three facilities, in Moscow, Lukhovitsy and Nizhny Novgorod. We cannot get by without the Moscow facilities today. Plans to gradually cut down production in Moscow are being discussed with UAC now. But that would have to be done very cautiously, since several thousand people work here.
Which will be the main facility?
Both Sokol and Lukhovitsy will both be developed and the workload divided between them, including types of fighters.
The president signed a decree on February 20 on the creation of the National Aviation Center in Zhukovsky. When will MiG be able to transfer its engineering center to Zhukovsky?
We fully support that project, it is going in absolutely the right direction. As for the time, of course, plans have to be consolidated with Ilyushin, Tupolev, Irkut and Sukhoi. Our only desire is that the move not affect our production process, since MiG is one of the few integrated companies, uniting everything from planning to production.
At the end of March, there was talk at UAC about the possibility of a stopgap option – the construction of a new building at the production facility in the Khodinskoe Pole area [of Moscow] where the UAC engineering center and corporation’s headquarters could be located.
Highly technical problems associated with the placement of UAC and its services are being solved. Various options are being discussed, including the one you mention. Since MiG Corp. is still not part of UAC, I have not devoted a lot attention to it yet.
You came to MiG Corp. at a difficult moment connected with the Algerian contract. Why did you leave the prosperous Irkut Corp. for the problematic MiG?
I don’t consider MiG problematic. The situation at MiG reflected what has happened in all of the Russian aviation industry. They are the same problems, to greater or lesser degree. The most important of them had been solved through the efforts of the previous management: production reform had been begun, we participated in the Indian tender with planes from the new product line and the MiG-29K project had been brought to a successful end. I have no doubt that we will restore the authority of the MiG brand.
Interviewed by Alexandra Gritskova and Konstantin Lantratov
link
http://www.kommersant.com/p897204/r_1/aviation_industry/
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