by Vlad Lavrov, Kyiv Post Staff Writer

Ukrainian and Russian aviation companies have inked an agreement to create a $500 million joint venture that will revive production of a giant, Ukrainian-designed cargo plane, which they say is enjoying increasing demand.

The An-124 Ruslan, the largest aircraft in the world to ever be mass produced, was launched in 1982 and discontinued 13 years later.

Both Russia and Ukraine have manufactured and modified the plane over the years. 

On Jan. 23 this year, Russian Volga-Dnepr Group and Zaporizhya-based Motor Sich announced that they would renew mass production of the Ruslan through a new joint venture called Air Cargo Apparatus.

Volga-Dnepr, a privately owned Russian Group of companies specializing in air and land cargo transportation, boasts subsidiaries in Europe, Asia and the United States.

Volga-Dnepr currently controls 53 percent of the global market for out-sized air cargo, while Ukraine’s Antonov has a 35 percent share.

There are currently around 40 Ruslans in service worldwide, only 26 of which are used for commercial purposes. Around 60 Ruslans were produced altogether.

Volga-Dnepr President Aleksey Isaikin said on Jan. 23 that the joint venture would require up to $500 million in investment and that his company would initially control 59 percent of Air Cargo Apparatus.

The newly created Air Cargo Apparatus will produce a new version of the Ruslan, the An-124-100M, and modernize the original model of the Ruslan.

Industry insiders said that the newer model Ruslan would include modifications to its engine and its control systems.

Volga-Dnepr, which boasts the largest number of existing Ruslans (10), has already placed orders for two An-124-100Ms, according to Volga-Dnepr Commercial Director Valeriy Gabriel.

Both aircraft will be manufactured in Ulianovsk, Russia, with the first scheduled to be completed by 2010, he said. The approximate cost of purchasing one An-124-100M is around $130 million, Gabriel added.

One of the major leasers of Ruslans, which can carry cargo of up to 150 tons more than 3,000 kilometers, is NATO.

In October 2005, NATO Maintenance and Support Agency (NAMSA) granted Ruslan SALIS, a 50-50 joint venture between Volga-Dnepr and Ukraine’s Antonov Design Bureau, a three-year contract worth at least $218 million.

Daren Adams, NAMSA’s person in charge of logistic support and transportation, said NATO is provided with two Ruslans stationed in Leipzig on a full-time basis, where the contractor set up an aircraft maintenance base.

In addition, the contract stipulates that NATO can request four more aircraft within nine days.

According to Adams, SALIS faced no competitors in its bid for the contract, which could be extended till 2010.

Gabriel, who is also executive director of SALIS, said that in addition to NATO, his company and Volga-Dnepr also lease Ruslans to Boeing, Lockheed Martin, Siemens, and the United Nations.

In addition to their original military designation, the Ruslans “have proven an exceptional success in the civilian and contract cargo market,” the Defense Industry Daily, a Vermont-based publication, reported.

Gabriel said that Volga-Dnepr more than doubled its business between 2005 and 2006, transporting 156,000 tons of cargo and generating $725 million in revenues. Revenues generated for Volga-Dnepr by its Ruslans alone totaled $357 million last year, he added.

Antonov Design Bureau, a 100 percent state-owned company which designed the An-124, is listed on Volga-Dnepr’s web site as a “main shareholder.” But Volga-Dnepr’s press service could not confirm what size stake Antonov holds in it.

Representatives of Antonov told the Post that their share in Volga-Dnepr was recently transferred to the State Property Fund of Ukraine.

Andriy Sovenko, a spokesman for Kyiv-based state-owned Antonov Design Bureau, which designed the An-124, estimated his company’s revenues for 2006 at $100 million.

Antonov’s subsidiary Antonov Airlines has a total of seven Ruslans, which it also rents out commercially.

According to Sovenko, Antonov will earn revenues by designing and certifying a modernized version of the airplane for the new joint venture.

Sovenko said that manufacturing of the Antonov-designed planes in Russia was the best option, as in the mid-80s the production of Ruslans was transferred to Ulianovsk from the Kyiv-based Aviant plant, where a total of 18 aircraft had been produced since 1982.

Motor Sich is a privately controlled manufacturer of aircraft and helicopter engines based in Ukraine’s Zaporizhya Region.

According to a Feb. 26 report by RBC-Ukraine, a business news information agency, Vyacheslav Bohuslaev, a member of Ukraine’s parliament and honorary president of Motor Sich, controls 61.16 percent of the company, both personally and through Zaporizhya-based Garant-invest.

Officials at Motor Sich would not comment for this article.

Source: Kyiv Post