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Alenia Aeronautica to acquire 25% of Sukhoi Civil Aircraft

RIA Novosti

19/08/2005 14:47 MOSCOW, August 19 (RIA Novosti) - Alenia Aeronautica, Italy's leading aeronautics producer and a major player on the European aerospace market, signed a preliminary agreement Thursday to buy at least 25% block in Sukhoi Civil Aircraft (SCA), daughter of the Sukhoi aircraft holding, a respected business daily reported Friday.

According to Vedomosti, Alenia, which is designing the Russian Regional Jet (RRJ) in cooperation with Ilyushin Design Office and Boeing, has the ability to also assemble RRJs in the future. Experts said this would make the aircraft more competitive, but ruin the idea behind the Russian aircraft industry's most ambitious project.

The RRJ is the main project to be implemented by the emerging Unified Aircraft Corporation (UAC) of Russia. International carriers will need an estimated of 5,500 RRJs until 2023, while the market at large is estimated at $100 billion. SCA hopes it will implement at least 15% of international orders for the aircraft.

Some market players said Alenia would provide space for assembling RRJs. SCA General Director Viktor Subbotin said the company did not plan to relocate assembly to Europe, but Russian Federal Industrial Agency head Boris Alyoshin and Alenia managers are not discounting the possibility.

Konstantin Makiyenko of the Center for Strategy and Technology Analysis said Alenia would help the aircraft gain a "European image."

National Reserve Finance Bank Vice President Andrei Derkach, also a member of the Board of Directors of Ilyushin Finance Co., which funds modern Russian-made aircraft leasing schemes and exports, argued the project would effectively become pointless if given a Western makeover. "Why should Russian taxpayers finance design work then?" Derkach said.

Experts could not evaluate the SCA share package because it practically has none of its own assets. Gennady Sukhanov of TsentrInvest investment said SCA's market value could aggregate $100-$300 million, given the state had invested 3.6 billion rubles ($126.34 million) in the RRJ project being pursued by the company. "This was largely a political decision. Therefore, the premium and discount are difficult to predict," Sukhanov said.

Alenia is the Italian Finmeccanica holding's affiliate, which manufactures military and civilian aircraft, among them ATR turboprop liners. The holding's revenues in 2004 reached $10.3 billion.

The RRJ project is worth about $700 million. The jet is expected to undergo certification procedures in Russia in late 2007, and in Europe in early 2008.