Paul Duffy/MOSCOW
A Russian government-sponsored report into the country's aerospace industry has delivered a damning verdict on the privatisation of its aerospace manufacturers and the sector's current health.
The report calls for two privatisations to be reviewed, demands a freeze in the certification of foreign aircraft until Russian processes are approved abroad, and says taxes should be raised on imported types which compete with Russian ones.
Published by Russia's Audit Chamber - a parliamentary body which monitors budgetary affairs - the report says that in three to five years Russia's industry "will not be able to produce competitive craft", and that "already the markets of Europe and the USA are lost".
The report charts the decline of the country's industry from the end of the Soviet era in 1992, at which point around 26% of the world airliner fleet was Soviet-made. It notes that in Soviet times the sector was producing more than 150 civil transport aircraft, 300 civil helicopters, 620 military aircraft and 390 military helicopters a year. In 1991, projections were for the industry to build 4000 aircraft and 3000 helicopters in the 1990s; 2400 of these for export.
The reality has been very different. Russian factories produced 240 aircraft and 900 helicopters since 1992, of which only 400 helicopters and 50 aircraft were exported - mostly early in the period. Overall, production dropped ninefold and domestic deliveries 11-fold. By 1999, the report says, just nine civil and 21 military aircraft were built, none going to Russia's military.
The authors of the report, which set out to examine "the legality of the privatisation process" and "the effectiveness of management and state support" in its aftermath, are clear where the blame for Russia's aerospace crisis lies. They identify "hasty and disorderly" privatisation and conversion to non-military output after the end of the Soviet Union. Of the 315 aviation plants and research organisations still operating in January, 224 were in private hands. The state has no interest in 94 of these and a majority stake in seven.
The Russian Aerospace Agency comes in for particular criticism for failing to establish effective mechanisms to protect "state political interests" in the sector. The report details "massive violations" concerning several companies.
Aviastar received property worth 3,044 billion roubles ($650 million at the time - now $110 million), with no inventory taken and property laws violated. Around 35% of shares were issued to foreign investors without appropriate capitalisation, causing the report to rate Ulyanovsk-based Aviastar, maker of the Antonov An-124 and Tupolev Tu-204, as insolvent.
The state lost control of Aviakor, which made the Tu-154 and Tu-95, when ANTK Tupolev (which held a 25.5% stake) and Aviakor Development formed Aviakor Holdings, creating a new company, Aviakorprom, to control the Samara factory. The privatisation of Rybinsk Motors without app-roval by Russia's Defence Indus- tries Committee is also criticised.
The report says the state made little money from the privatisations, receiving less than $50,000 from the Tupolev Aviation Complex, despite assets including 13 airliners; just $10,000 from Ilyushin, with three airliners; and under $30,000 from the Mil Heli-copter Plant, which kept 13 helicopters with an average value of $8 million, including three Mil-26s.
No regard was taken of intellectual rights, the Audit Commission says, while legal flaws allowed foreign investors to acquire substantial interests in companies including Tupolev (26.7%), Aviastar (35%), Mil (41.28%), Rosvertol (37.1%), Perm Motors (13.24%) and VASO Voronezh (23.14%). Most promised foreign investment failed to materialise, and production rates fell.
Of 131 businesses audited in depth, the report says 35 are loss-making, with output just 20% of capacity. And because the export of assemblies and spares is most profitable, companies are loath to sell at home. The report cites 150 cases of Russian orders being refused.
Accusing the state of failing to honour funding promises, the report, which has been passed on to the government and the state prosecutor's office, proposes that:
• a full inventory of the industry should be prepared;
• the privatisations of Aviastar and Aviakor should be reviewed;
• certification of foreign aircraft should happen only when Russian certification processes are accepted by other countries;
• import tax should be increased for a foreign aircraft type if it has a Russian equivalent;
• Moscow should take economic and diplomatic steps to boost exports.
Source: Flight International
