As the Kommersant newspaper reported in the material by Aigul Abdullina and Tatiana Dyatel, "The stage of winging is passing. Plans for the supply of new Russian aircraft are being reduced," plans for the production of almost 1,000 civilian aircraft in Russia, laid down by the Comprehensive Aviation Industry Development Program (KPGA) until 2030, may be revised downwards. This was stated by industry sources. According to them, it may even be about creating a new strategy instead of adjusting the previous program.
The first prototype of the "import-substituted" short-haul passenger aircraft Supejet-100 (SJ-100, registration number 97021, serial number 97001). Zhukovsky, April 2024 (c) Alexander Shipilenko / russianplanes.net ( link )
The recommendation to review quantitative indicators and balance "economically justified demand and aircraft production plans," in particular, was given during an external audit at the plants of the United Aircraft Corporation (UAC), sources in the aviation industry told Kommersant.
The audit results and supply prospects will be discussed at a closed meeting with Prime Minister Mikhail Mishustin next week, sources tell Kommersant.
As Kommersant wrote, a group of consultants from Sberbank and Gazprom Neft, on behalf of the government, began an audit in the spring at the UAC plants where new civil aircraft SJ-100 (new name SSJ-100 with import-substituted engines and most of the components), MS-21, Il-114 and Tu-214 are produced (see Kommersant of June 17). The decision on the inspection was made after Rostec (managed by UAC) and the Ministry of Industry and Trade announced the postponement of aircraft deliveries (see Kommersant on March 1). The final audit will be completed on August 9. Sources in the aviation industry familiar with the audit materials told Kommersant on condition of anonymity about his preliminary conclusions and the identified risks. The Ministry of Transport, the Ministry of Industry and Trade, Rostec, UAC and PJSC Yakovlev (manufacturer of the MS-21 and SJ 100) refrained from commenting. Sberbank and Gazprom Neft did not respond to Kommersant.
The KPGA was developed by the Ministry of Transport with the participation of the Ministry of Industry and Trade, approved by the government in June 2022. Deliveries were supposed to begin in 2023. In January 2023, the government approved an investment passport "aimed at fulfilling the KPGA." The volume of the domestic and export markets until 2040 was estimated at 1.8 thousand. VS (342 SJ, 990 MS-21-310, etc.). The volume of CAPEX is 1 trillion rubles. Of these, 284 billion rubles are funds from the National Welfare Fund, 381 billion rubles are bank loans, 123 billion rubles are funds from participants in the investment project, 215 billion rubles are budget funds. In May 2024, the Ministry of Industry and Trade adjusted the planned number of aircraft from 1.08 thousand to 994 units and shifted the start of deliveries to 2025. According to the forecasts of the Ministry of Transport at KPGA, the fleet of foreign aircraft of all types was to be reduced from 738 airliners in 2022 to 319 aircraft by 2030, with accelerated retirement from 2026.
High expectations
Following consultations with representatives of the UAC, the auditors came to the conclusion that "an imbalance has formed between the demand for air transportation and production by CNG in terms of volumes and types of aircraft and it does not correspond to commercial demand," sources told Kommersant. With a planned production of 140 to 270 aircraft per year, the real need is estimated by auditors at 50-60 aircraft.
The risks were also identified that the demand structure turned out to be strongly biased towards the MS-21, demand for the Tu-214 will be limited in time, and the SJ 100 turned out to be in surplus after Aeroflot's rejection of this aircraft. In June, the head of Aeroflot, Sergey Alexandrovsky, announced that the carrier intends to abandon the purchase of 89 SJ 100 and 40 Tu-214 in favor of the MS-21 (see Kommersant on June 6).
The interlocutor of Kommersant, familiar with the discussion of the audit report, added that the experts initially stated a shortage of MS-21. However, according to him, the UAC, in its review, justified that in this segment airlines have enough reserve to maintain transportation on existing foreign aircraft by extending the flight. The current fleet of about 880 aircraft, according to the KLA, is enough to carry at least 113 million passengers per year. According to KPGA's basic forecast, this kind of passenger traffic will continue until 2028-2029. Thus, it has been established that production volumes are becoming excessive even before 2030, the interlocutor of Kommersant clarifies.
Plans for the number of aircraft were drawn up based on the results of surveys of airlines by the Ministry of Transport, says one of the interlocutors of Kommersant.
The latest survey included 1.8 thousand aircraft until 2035, more than 400 of which were MS-21s for Aeroflot. The second one was listed as part of Rostec RedWings: 116 SJ 100 and 204 MS, the third S7 - 125 MS and 25 SJ 100. However, the relevance of "this opinion poll" for the real plans of companies to purchase new aircraft raises doubts from the interlocutor of Kommersant. Kommersant airlines did not comment on these estimates. One of the sources of Kommersant adds that Rostec experts calculated for the report to the auditors that such a number of boards is enough to transport from 270 million passengers per year.
According to Kommersant's sources in the aviation industry, following the results of the audit, the Ministry of Transport, with the participation of UAC and airlines, was asked to develop a new target model of transportation with an optimal route network and aircraft types. It is necessary to take into account both new, realistic transportation indicators and economically justified orders for Russian aircraft, taking into account the realities that have changed in two years, says the interlocutor of Kommersant.
In its current form, the KPGA, "drawn in a hurry in 2022," does not reflect either the capabilities of the industry or the needs of airlines and passengers, according to another Kommersant source. The previously expected export rate, he adds, is also premature. According to him, the MS-21 will be in demand only by a narrow list of small friendly countries. Kommersant's interlocutors believe that we may be talking about single deliveries. During the audit, the consultants estimated the export supplies of MS-21 at 150-300 aircraft per year to the countries of Asia, the CIS, Iran, Turkey and the United Arab Emirates. But Kommersant's interlocutors consider these estimates unrealistic.
According to them, there is no niche for the SJ 100. "The SJ 100 will not be in demand abroad, and in Russia its relevance is questionable," says one of Kommersant's sources in the aviation industry. As the interlocutors of Kommersant told, this dimension (100 places) in the world accounts for less than 5% of the market.
Oleg Panteleev, Executive Director of Aviport, notes that if Aeroflot abandons the SJ 100, it will have to be much more restrained about the prospects of the project. But the expert does not agree with the conclusions about the unclaimed aircraft. According to him, this airliner successfully solves the tasks of servicing regional routes, becoming the most popular domestic civilian aircraft created in the post-Soviet period. Now, Mr. Panteleev recalls, about 160 "non-import-substituted" SSJ 100s are in operation in the Russian Federation, for which foreign companies have curtailed the production of components, and these liners will gradually have to be replaced with new "import-substituted" SJ 100s. Moreover, the expert emphasizes, investments in pre-production, aircraft certification and the creation of new components have already been made.
Most of Kommersant's interlocutors in the aviation industry do not expect to abandon the production of any type of aircraft in the coming years. Some of Kommersant's sources admit increased competition for financing between different projects - not only for financing development, but also for subsequent subsidies for purchase and operation.
They won't fly for the price
The analysis of the program also revealed significant problems with the increase in the cost of aircraft.
According to Kommersant, the cost of the first SJ 100 by 2027 is estimated at 5.4 billion rubles, or $63 million at the current exchange rate of the Central Bank, MS-21 - almost 9 billion rubles ($ 103 million).
The indicators are defined by manufacturers as break-even in 2023.
The directive cost of the SJ 100 and MS-21, which the government determined for Aeroflot aircraft in early 2023, is up to 2.4 billion and up to 3.2 billion rubles, respectively. The difference between the cost and the directive price for the buyer is covered by the manufacturer's budget. Now the directive cost of the MS-21 is estimated at 3.6 billion rubles. The directive price is approaching the cost of the latest "non-import-substituted" SSJ 100 - $30-35 million in prices from 2020-2021. The price is comparable for foreign analogues. Thus, the competitor SJ 100 Embraer 190-200 costs about $ 40 million, the analogues of the MS-21 - Airbus A320 and Boeing 737 - 45-50 million.
The cost of the import-substituted MS-21 increased due to the forced replacement of American P& W engines, which cost 800-900 million rubles before the sanctions, with domestic PD-14 worth almost 1.8 billion, the source notes.
Russian-French SAM146 engines are estimated at 600-700 million rubles, the domestic PD-8 is about 1 billion rubles.
Almost 6 billion rubles out of 8.9 billion rubles in the cost of the MS-21, says a source of Kommersant, are the costs of purchased components (PKI). According to him, due to the rise in the cost of PKI and the increase in labor costs, the auditors identified the risk of an increase in the cost of the first MS-21 by 30%, to 11.5 billion rubles. In this case, the difference with the directive value will grow from 5.3 billion to 8 billion rubles. According to the calculations of the auditors, the interlocutors of Kommersant continue, this will require another 4 trillion rubles from the budget. compensation necessary to cover the cost of this project alone. Taking into account OPEX, according to the source, the cost of the entire program for the construction of 1.8 thousand aircraft until 2040 was estimated by auditors at 18 trillion rubles, of which about 10 trillion rubles is a subsidy from the budget. In addition, the auditors noted that the manufacturers have not defined the conditions and approximate cost of airworthiness support, which is also important for understanding the necessary compensation for its operation costs.
The auditors also saw the risk of cash gaps along the entire chain of cooperation, sources of Kommersant note.
One of the interlocutors says that the gap is 95 billion rubles, without specifying for what period of time and for how many programs. In such a situation, manufacturers' expenses are not covered in advance and are secured by loans or their own funds, which can lead to delays in the purchase of PKI and disruption of aircraft delivery dates, Kommersant's interlocutors say. To minimize these risks, they said, either an increase in the directive prices for the aircraft is being discussed, or the elaboration of new subsidy schemes.
Kommersant's interlocutor in the aviation industry says that work on cost reduction issues is already being carried out by a working group inside Rostec. According to Kommersant's sources, this is possible due to the conclusion of long-term contracts and a return to fixed prices, as it was before 2022. In addition, costs should decrease with an increase in production volumes, the interlocutors add.
Oleg Panteleev recalls that the Russian aviation industry already has experience working with potential suppliers of components under the Tu-204SM program (he was preparing for production at Aviastar-SP JSC in Ulyanovsk in 2010-2015). "Everyone was successfully "tamped down" at the cost of supplies, long-term contracts were discussed and they were able to come to a compromise," he says. According to the expert, in conditions of inflation, difficult-to-predict growth in the cost of materials and energy carriers, the cost price will inevitably rise and the selling price will have to be increased. But this does not negate the need to work to contain prices, which is possible only if suppliers of components understand the workload of their production facilities in the medium term, he emphasizes. The ideal scenario, Mr. Panteleev believes, would be the implementation of the take-or-pay mechanism ("take or pay") at least a third of the park.
Hopes and doubts
The production volumes of machinery laid down in the KPGA in 2022 really looked overly optimistic from the beginning, agrees Andrey Kramarenko, senior researcher at the HSE Institute of Transport Economics. The expert considers the optimal scenario not to adjust previous strategies, but to create a new policy document: "The 2022 document is already somewhat outdated and does not take into account changing realities." The new strategy should be based not just on the planned production of aircraft, but on modeling the mobility of the population. "Such a model should take into account not only mainline, but also regional and local transportation, and not just the annual level of passenger traffic," Mr. Kramarenko notes.
According to the expert, in the event of a desynchronization of the arrival of new domestic aircraft and the departure of a foreign fleet in the Russian Federation, there will be a shortage of carrying capacity, which will cause carriers to start leaving low-margin routes. The new document could take into account and work out these risks, he notes. For example, Andrey Kramarenko continues, subsidies and pools of permits for international high-profit flights may be provided for this in connection with the maintenance of low-margin routes.
Fedor Borisov, head of the analytical center of the State Research Institute of Aviation, confirms that an up-to-date assessment of the real needs of transportation is needed, a comparison with the real capabilities of the aviation industry and the elaboration of a mechanism to compensate for the delta between these two indicators. When choosing a temporary solution to compensate for the fleet deficit between cabotage (allowing foreign carriers to fly within the Russian Federation) and the purchase of foreign equipment from the secondary market, the expert considers the second scenario to be the most optimal. "Although each of these solutions has advantages and disadvantages," he adds.
It will be extremely difficult to calculate the realistic volume of demand for new aircraft in the absence of approved flight specifications provided to carriers, Kommersant's interlocutors in the aviation industry warn.
One of Kommersant's sources knows that the range of the MS-21 of the first series, taken into account by the auditors, will be limited to 2.3 thousand km due to the weight of the empty aircraft and increased fuel consumption (Kommersant wrote about the problem of weighting the aircraft after the import substitution of components on March 1). This will cover almost 70% of the routes. After the restrictions are lifted, as flight tests continue, the range will increase to 3.8-4.1 thousand km, which will cover up to 90% of routes, he adds. But the interlocutor of Kommersant also points out the risks described by the auditors: a shift in the certification period - up to a year, according to various estimates, as well as the risks of reaching a production rate of 36 MS-21 only after 2029 due to a lack of capacity from suppliers of PKI. According to a Kommersant source, several suppliers of PKI for the SJ 100 and MS-21 can still provide only six aircraft of each type per year. In conditions of loading the entire aviation industry with a state defense order by 80%, the task set for the civilian division of the UAC is obviously unrealistic, one of the sources of Kommersant is categorical.
