LDN - Business

Aeroflot says new Russian jet 'serious' competitor to Boeing, Airbus

[June 02, 2017] By Gleb Stolyarov

ST PETERSBURG, Russia (Reuters) - Russia's new MS-21 passenger plane, its first domestically-built mainline commercial aircraft since the collapse of the Soviet Union, is a serious venture capable of competing with industry heavyweights Airbus <AIR.PA> and Boeing <BA.N>, the head of national airline Aeroflot <AFLT.MM> told Reuters on Friday.

Russia carried out the MS-21's maiden flight on Sunday and has heralded the twin-engine jet as a domestic alternative to those made by America's Boeing and Europe's Airbus, which dominate the medium-range narrow-body market.

Manufacturer Irkut Corporation <IRKT.MM> and its state-controlled parent company United Aircraft Corporation (UAC) <UNAC.MM> say the new plane is more efficient than its Western counterparts, but analysts warn Russia faces a huge challenge to shatter the transatlantic airplane duopoly.

"If they achieve the goals they announced, then this is of course a serious plane. It is a real plane which will compete with Boeing and with Airbus," Aeroflot CEO Vitaly Savelyev told Reuters in an interview at an economic forum in St Petersburg.

"I think this will be a serious machine," he added. "It will be light, economical and effective. Now we are simply waiting for it."

Flag carrier Aeroflot, which operates a fleet dominated by narrow-body Airbus models, has yet to sign any purchase contracts for the MS-21. But the company expects to do so this year and state defense conglomerate Rostec has already said it will lease at least 50 MS-21 planes to the airline.

Savelyev said he expected the first delivery to be made in 2019 and 40 percent of Aeroflot's fleet would be made up of domestic aircraft by 2023.

NO PRESSURE

No official price has been announced, but it will have to be competitive to justify future purchases, Savelyev said.

"We, as consumers, cannot take a plane that is more expensive than competing versions abroad. If we are to do it, it has to be at a competitive price," he said.

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Aeroflot CEO Vitaly Savelyev attends the St. Petersburg International Economic Forum (SPIEF), Russia, June 2, 2017. REUTERS/Sergei Karpukhin

The twin-engine MS-21 will be built in two variants: the MS-21-300 which will have 160-211 seats, and the later MS-21-200 which will have 130-165 seats. It is sometimes referred to as the MC-21 when using the Russian name and Cyrillic letters.

Production is expected to start in the next two years and state media have said numerous contracts with domestic and foreign carriers have already been agreed. Irkut said it so far had "firm orders" for 175 planes.

Majority state-owned Aeroflot is sometimes seen as making business decisions which primarily benefit the Russian government, such as a move in 2015 to buy a 75-percent stake in failing competitor Transaero.

The purchase was later abandoned and Aeroflot agreed to fulfill Transaero's ticket obligations at the state's request.

Savelyev said he had come under no pressure to support the MS-21, which the government is hoping will help rejuvenate domestic industrial production and make the country less dependent on foreign firms.

"We are a commercial company, there is no pressure on us or instructions to buy Russian planes," he said. "We would like there to be a domestic aircraft, because every airline all over the world tries to support domestic producers."

(Writing by Jack Stubbs; Editing by Dmitry Solovyov/Keith Weir)

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