The Moscow Times
Tuesday, July 20, 2004. Page 5.

Sukhoi, Sibir Ink $1Bln Jet Contract

By Lyuba Pronina
Staff Writer

Sukhoi Aviation has reached an agreement with No. 2 domestic carrier
Sibir for a $1 billion acquisition of 50 regional jets that Sukhoi
develops jointly with Boeing, the companies said in a joint statement
Monday.

“This is more than a memorandum of understanding,” Sukhoi deputy
general director Vadim Razumovsky said at the Farnborough
International Air Show that opened in England on Monday. “We will sit
down and in a short period of time outline the contract, its schedule
and financing,” he said, adding that he expects the deal to be firmed
up later this year.

Razumovsky said that Sibir has opted for the 95-seater version of
Sukhoi’s Russian Regional Jet family with the catalogue price of $26.2
million per jet. Delivery of the aircraft will start in 2007.

Sukhoi’s revenues were $1.5 billion last year, mainly from the export
of its fighter jets.

“[Agreement with Sibir] will allow us to fully launch the programs of
the new family of Russian regional aircraft in the near future,”
Sukhoi general director Mikhail Pogosyan said in the joint statement.

Sukhoi, which began the RRJ program in 2001, was waiting for a launch
order to get the program off the ground.

Flag carrier Aeroflot, which is soon due to announce a tender for 50
regional jets, in 2001 signed a memorandum of understanding for 30
RRJs that has not been formalized into a contract.

“I hope that Sukhoi’s promises about aircraft characteristics and
delivery schedules will be fulfilled, we needed regional aircraft
yesterday,” said Sergei Koltovich, head of fleet planning for
Aeroflot.

He said the listed price of $26 million is high and will make it
difficult for an airline to turn a profit, especially in Russia, with
low domestic yields.

Aeroflot is looking for jets at half that price.

Sibir spokesman Ilya Novokhatsky said that Sibir has yet to identify
the sources of financing, which will most likely come in the form of
loans.

Russia’s fastest-growing airline, Sibir has a fleet of 52 Tupolevs and
Ilyushins, which last month and this month have been supplemented by
two Airbus 310s formerly operated by Aeroflot.

In the past Sibir has been critical of the domestic aircraft industry
and its programs, including the RRJ, for the lack of immediate
availability and economic efficiency.

A source in the aviation industry said Monday that the agreement is a
trump card for Sibir, which is trying to get preferential treatment
from the administration in Novosibirsk, where the jet will be
produced, in the upcoming sale of the state’s 51 percent stake in
Novosibirsk’s airport, one of Sibir’s bases.

Sibir declined to comment on this.