|| 19 February 2007
New Customers for Russian Fighters
Russia & CIS Observer, #1 (16) february 2007 (http://www.ato.ru/rus/cis/)
The past year was a successful one for Russian manufacturers of combat aircraft. After a relative decline in export deliveries during 2005, Russia significantly increased both its order backlog and the amount of military aircraft and helicopter deliveries in 2006. Russian companies also managed to extend the geographical reach for their exports: in 2006, Algeria and Venezuela became new customers for Russian fighters.
According to the 2006 results, Russia is on its way to establishing another arms export record. The last peak in defense sales was set in 2005, with $6.1 billion of Russian arms exports to foreign customers. According to Mikhail Dmitriev, head of Russia's Federal Military and Technical Cooperation Service, the anticipated amount of defense exports in 2006 was in excess of $5.5 billion, and the amount was approaching $6 billion at the end of December. Considering the fact that significant amounts of export deliveries traditionally come at year-end, the resulting amount may surpass the 2005 totals. However, Dmitriev's earlier forecast that Russian arms export would reach $7 billion in 2006 is unlikely to happen.
The overall share of aircraft and related armament exports for Russia was back to the more traditional 50% share in 2006, having declined to 34% in 2005. This previous drop was the result of a rising share of Russian military naval exports (including submarine and destroyer deliveries to China) and a decrease in shipments of Sukhoi fighters. In 2005, for the first time in 11 years, Russia did not export a single Su-27/Su-30 family aircraft.
2006 primarily was marked by four large contracts for Russian fighters and trainer aircraft, with Algeria and Venezuela becoming new large customers for Russian aircraft.
During the visit of Russian President Vladimir Putin to Algiers in March 2006, a number of agreements were signed covering deliveries of various arms for a total of $7.5 billion - including three contracts for fighter and trainer aircraft. The first deal for $1.5 billion involves deliveries of 28 Su-30MKA twin-seat fighters in 2007-2009. This version is close or identical to the Su-30MKM ordered by Malaysia, which in turn, was based on Su-30MKI version developed for the Indian Air Force.
The second agreement, valued at $1.8 billion, is for the delivery of 28 MiG-29SMT fighters and six twin-seat MiG-29UBT aircraft. A distinct feature of this contract is the obligation of Russia's MiG Corp. jet manufacturer to buy back several dozen Algerian MiG-29 fighters for $300 million. It is a first case of a large-scale trade-in involving Russian military cooperation with foreign states.
Another contract involves the delivery of 16 next-generation Yak-130 trainers for $200 million, beginning in 2008. Algeria has become the launch foreign customer for this aircraft. According to unofficial information, an option for 30 more MiG-29SMT was also signed.
In July, Russia's Rosoboronexport arms trading agency signed a second export agreement involving a considerable share of aircraft, this time with Venezuela. Facing the U.S. embargo for F-I6 spare parts, Venezuela made the decision to purchase 24 twin-seat Su-30MK2 fighters. The aircrafts alone cost approximately $1 billion, or $1.5-2 billion taking into account related infrastructure and armament. Additionally, Venezuela has expressed interest in the Yak-130's light combat aircraft version, which would be equipped with a small radar, plus air-to-air and air-to-ground missiles. However, the signing of a corresponding contract is only possible after relatively expensive development work and the beginning of series production for the Yak-130 trainer, destined for both Algeria and the Russian Air Force.
In review, the 2006 export business for Russia involved contracts for 52 Su-30 family fighters, 34 MiG-29SMT/UBTs and 16 Yak-130s, worth up to $5 billion in total. These contracts will provide lrkut Corp. (manufacturer of the Su-30MKA and Yak-130) with a solid workload through 2009, and a good 2007 backlog for the Komsomolsk-on-Amur KnAAPO facility (producer of the Su-30MK2).
It should also be noted that in February 2006, another contract with the Indian Air Force was almost concluded. According to this agreement, Irkut Corp. will buy back 18 Su-30K fighters originally delivered in 1997 and 1999, providing 18 Su-30MKI Mk3s in return. Foreign media stories report that the ex-Indian aircraft subsequently will be delivered to Belarus and upgraded to the Su-30KN version. However, the deal was not finalized during the year, even though the aircraft already are built and ready to be shipped to India. It is expected that the contract will be signed before the end of current fiscal year, which ends in March. Reports also have appeared regarding the intention of India's Air Force to order 40 more Su-30MÊIs.
In the field of helicopter production, the largest contract was signed in July with Venezuela for $484 million, covering the delivery of 34 Mil Mi-17V-5s, two Mi-35s and two Mi-26Ts. Taking earlier agreements into account, Venezuela will receive 45 Mi-17s, 10 Mi-35s and three Mi-26s through 2008 for a total of $731 million. In 2006, large helicopter contracts also were signed with China (24 Mi-171s for $200 million), Croatia (10 Mi-171s rotary-wing aircraft for $65 million) and Portugal (six Kamov Ka-32s for $50 million).
After a temporary pause during the previous year, export deliveries of Su-30 family aircraft were resumed in 2006. Venezuela received four Su-30MK2 fighters for $160 million from the Sukhoi holding. It should be noted this delivery occurred only four months after the signing of agreements with Venezuela in July. It is a proof of the good condition of Sukhoi's main production facility, the KnAAPO plant, and the presence of solid manufacturing reserves. It seems that at the same time, Venezuela also began receiving accompanying ground equipment and aircraft armament.
lrkut Corp. continued its deliveries of kits to India for Su-30MKI assembly at HAL plants within the framework of a 2000 contract that involves licensed production of 140 aircraft. The rate of licensed production is steadily growing: at the program's start in 2004, lrkut delivered three kits to India; in 2005, five were provided, followed by 13 in 2006. By March 2007, the Indian Air Force will have 21 combat-ready Su-30MKI fighters assembled at its domestic plants.
MiG Corp. has begun deliveries of MiG-29 fighters to Algeria according to a contract signed in 2006 as a part of large deal worth $7.5 billion. Media reports state that at least two MiG-29UBT fighters were delivered; however, it is possible that 4-6 aircraft were shipped in total.
Primary helicopter deliveries in 2006 were made to Venezuela and China. Venezuela received six Mi-17V-5s, three Mi-172s, eight Mi-35s and one Mi-26T for a total value of $230 million. China took delivery of the first 12 Mi-171s (valued at $100 million) within the framework of a 2006 contract for 16 helicopters, and it leased one fire-fighting Mi-26T for three years. Contracts with Czech Republic and Iraq were completed, with the countries receiving three Mi-35s and 10 Mi-17s, respectively, for $100 million in total. In addition, small batches of helicopters were delivered to Sudan, Mexico and Burkina Faso; while helicopter maintenance and overhaul work was conducted in Peru and Kazakhstan. Delivery of a Mi-17 helicopter simulator to Mexico should be noted separately; this is the first example of Russian high-tech simulator exports.
It is highly probable that the delivery of Russian aircraft engines to China according to contracts signed in 2005 also was completed last year. Agreements covered 180 AL-31F powerplants (out of which, 100 engines were manufactured by Moscow MMPP Salyut plant and 80 by Ufa-based UMPO) and 100 AL-31FN versions (produced by Salyut). The AL-31Fs probably will replace existing engines on Chinese Su-27SK. and Su-30MKK fighters, while the AL-31FN will be used to power Chinese J-10 fighters. Total cost of these engines deliveries is expected to approach $1 billion.