Last week Aeroflot Russian Airways announced that it will buy 22 Boeing 787 Dreamliner airplanes. Aeroflot formally signed the contract with Boeing at the St. Petersburg Economic Forum on Saturday, June 9, 2007. The $3 billion order was part of $13.5 billion in new business deals announced over the weekend at the conference, which drew over 10,000 visitors to multiple venues in Russian President Vladimir Putin's hometown. President Putin joined several of his cabinet ministers and many Russian business leaders at the showcase event to promote Russia's booming economy.
A year ago, Russia Blog reported the widespread speculation in the Russian newspapers that the Boeing-Aeroflot deal would become a casualty of deteriorating U.S.-Russia relations. However, at the end of the day, healthy international competition and the attractiveness of Boeing's product trumped the legacy of the Cold War. In March 2007, Aeroflot agreed to purchase 22 A-350s from Boeing's European rival Airbus - but also pressed ahead with plans to purchase 787s.
After years of mismanagement by its previous owners during the 1990s, Aeroflot has re-emerged
as Russia's leading airline
The Aeroflot order is good news for the U.S. Pacific Northwest, and adds twenty two airframes to Boeing's already impressive tally of 500+ orders for the Dreamliner. What makes these numbers even more phenominal is the fact that the 787 has yet to fly - the Dreamliner's first test flight is scheduled for August 2007, and the first plane won't enter regular service until 2009.
Still, Boeing 787s will be flying for Aeroflot years before Airbus is expected to deliver the first advanced A-350 to Russia, in 2014.
As the global airline industry continues to struggle with post-9/11 security costs, high jet fuel prices, and aging airport infrastructure, Boeing is taking the lion's share of new orders. Meanwhile, Airbus has suffered numerous setbacks and cost overruns while producing its A-380 superjumbo jet. Compounding Airbus' difficulties, few international airports are capable of handling the gigantic A380, and the 787 uses a lot less fuel in an era of high oil prices.
Bloomberg's news story published today in The Moscow Times adds another interesting angle to this story:
Separately, Boeing signed an agreement with Unified Aircraft Building Corporation to study cooperation in research, design and development of commercial planes.Boeing also agreed to boost cooperation with Sukhoi's commercial airplane unit. Boeing has consulted Sukhoi Civil Aircraft on its Superjet-100 family of midrange passenger jets. Boeing will help Sukhoi in post-sale support, it said Saturday.
Aeroflot is the second Russian customer for the Dreamliner. S7 Airlines, the country's second-largest carrier, agreed last month to buy 15 of the aircraft with options for another 10.
Sukhoi is best known internationally for its Su-27 family of advanced supersonic fighter jets
As our contributor Vladimir Kuznetsov of the FINAM Investment Company reported last week, ("Russian IPOs: Week 22 of 2007 Reviewed"), Russia's United Aicraft Building Corporation is planning an initial public offering by the end of 2010. This means that the state-owned aerospace consortium (like Europe's Airbus) will be partially privatized, and international investors will be able to purchase stocks in the company. Some of our readers may find it ironic that a new "national champion" of Russian capitalism is being created from the remnants of Soviet aviation icons such as the Mikoyan (MiG), Tupolev and Sukhoi design bureaus, which were mainly known for producing combat aircraft.
An excellent article posted yesterday on the Design News blog ("Aeroflot's Big 787 Order Signals New U.S.-Russia Cooperation") also adds some interesting background on Boeing's research and development investments in Russia:
Boeing's Russia connection is well-established. It has maintained a Technical Center in Moscow since 1992 with 1,400 engineers and just announced in St. Petersburg an extensive R&D relationship with Russia's United Aircraft Corporation under which a half dozen Russian aircraft firms have been consolidated. One of those is Sukhoi, a 58-year military plane manuafcturer which about to launch the Superjet regional jetliner. It's slated to take its maiden voyage at around the same time as the 787 in September. Boeing is a close adviser to Sukhoi on the Superjet program. Russian firm VSMPO is also a huge provider of titanium to Boeing. Just say this multi-faceted deal is a wonderful combination of glasnost and business.
Here at Russia Blog, we couldn't have said it better ourselves.
Click on the link to another Russia Blog post to read more about Aeroflot:
Comments
Awesome piece of news.
I hope Russo-American trade grows to large enough proportions for the politicians to be more wary of souring the relationship for fear of hurting trade.
Money speaks louder than anything else.
We'll see.
Posted by: Al Goroh | June 13, 2007 12:35 AM
Aeroflot is not the first one to buy Boeing 787. The Russian air company S7 Airlines had made a contract on purchasing these planes earlier than Aeroflot.
S7 buys Boeing 787
Posted by: Nat | June 16, 2007 10:53 AM
This news is a good example for the "Only in Russia" section.
Russia has IL-96 wide body planes but they don't invest in further development of IL-96, instead Russians invests in EADS, makers of competing Airbus. But... get this... Russia doesn't buy neither IL-96 nor Airbus, instead they buy Boeing.
This kind of "sound" financial decisions make sense only in Russia. It'll sure be fun to watch how Russians are going to fly those Boeings when US cuts the spare parts supply, as it happened in Iran.
Posted by: Anonymous | June 17, 2007 10:04 AM
For almost two years now the media has been reporting of Aeroflot flip-floping between choosing A and B. But for months already Aeroflot was hinting at getting 44 long-distance planes, so this isn't a surprise. They've been making smart fleet investments recently. In 5-10 years they'll have 22 A350's, 22 B-787's, 10 A330's, 50/60 A320's, and 45 Sukhoi Superjets - how much more modern can they get? Looks like they'll have to build a Sheremetyevo-4 too just to fit all those planes!
Posted by: uralets | June 18, 2007 2:06 PM