Volga-Dnepr Group / Press-center / Media Coverage

OAK Branches Out. Uzbekistan's aircraft production to become part of Russian aircraft giant

07/16/2007

The long-term future of several key Ilyushin aircraft projects is coming into focus, even though it may mean the production facility in Uzbekistan will have to give up some of its independence.

For several months, there has been some question how Ilyushin will be able to support mass production of the Il-76 freighter program and the Il-114 regional turboprop. While Ukraine is trying to maintain its independence in aircraft production, Uzbekistan is betting its best option is to cozy up to Moscow.

Russia's first vice premier, Sergei Ivanov, announced last week that Russia and Uzbekistan reached an agreement to integrate the Tashkent-based aviation production association (known by the Russian acronym TAPO) into the Russian United Aircraft Corp. (known as OAK). Russian design facilities are undergoing a broad integration, with manufacturing facilities being brought under the OAK umbrella. OAK was established last year, but at the time Ilyushin had limited control over production and marketing of its aircraft being built by TAPO. To regain control over its product portfolio, Ilyushin is trading its freedom by aligning with OAK.

TAPO produces Ilyushin 11-76 military and commercial four-engine freighters, II-78 tankers and Il-114 regional turboprops, all developed by the Ilyushin design bureau in Moscow. Last year, Ilyushin and TAPO developed and built the first prototypes of the IL-76MF, a stretched version of the IL-76. It provides increased takeoff weight partly through the introduction of new Perm PS-90 engines, which are more powerful and burn fuel at a lower rate. The two also devised various modifications of the II-114 regional turboprop. But the problem for Ilyushin and TAPO has been a lack of commercial success.

The Russian air force would not buy Il-76MFs as long as Russia did not control the manufacturing facility. Commercial operators and Russian leasing companies outside Uzbekistan hesitated to order the II-114 because of the uncertain future of the long-term relationship between Ilyushin and TAPO.

For over a decade, TAPO survived on Il-76 exports to both military and commercial customers. The largest order came from China. Russian arms trade monopoly Rosoboronexport signed a contract in 2005 worth $1 billion for delivery of 34 Il-76 military transports and four 11-78 tankers. They were to be handed over this year, but in 2006 TAPO managers said more money was needed to fulfill the contract.

In retaliation, the Russian government late last year decided to set up Il-76 manufacturing in Russia, at the Ulyanovsk-based Aviastar plant. Achieving that relocation will require an investment of more than 6.5 billion rubles ($255 million), and the first aircraft will not roll off that line until 2010. Meanwhile, the backlog for Il-76s is increasing. The latest order includes two Il-76MFs for the Jordanian air force and three more II-76s with PS-90A-76 engines for Russian Volga-Dnepr cargo operator (which also holds options for 10 more).

The decision to integrate TAPO into OAK should ease bilateral tensions and allow manufacturing to be accelerated. A working group of representatives from both companies will draft proposals for the transition by the end of the year.

This is not Russia's first attempt to gain control of TAPO. In the late 1990s, the Ilyushin design bureau received permission from the Russian government to acquire shares in TAPO and even established a new joint stock company named Interstate Aviation Complex Ilyushin. But a deal with the Uzbek government, the main shareholder of TAPO, could never be worked out.

Array

Back to the list