Antonov in Search of New Partners and Niches

The hostilities in the eastern parts of the Ukraine initiated by Kremlin-supported insurgents have severely impacted the famous aircraft designer and manufacturer, Antonov. The firm has no choice but to turn its back on the Russian military and commercial market and seek its fortune elsewhere. However, this outside imposed strategic u-turn is hampered by the fact that Antonov is currently losing much money.

The Ukraine-built future An-178 freighter can uplift 18 tons  /  source: Antonov
The Ukraine-built future An-178 freighter can uplift 18 tons / source: Antonov

The 1945-founded enterprise has experienced a number of political and economic ups and downs during its almost seventy years of existence. But despite the vanishing of the Soviet Union with the deep economic impact this shift of political system caused and the emerging of the Ukraine from a mere appendix to the SU to an autonomous state, Antonov has never been in a more difficult situation than today. “No, we currently sure aren’t in an enviable position,” confirms one of their leading managers. This, because the creator of aircraft models like the renowned ‘Ruslan’ An-124-100 freighter has definitely and presumably for a very long period of time lost the large Russian market, it’s up to the Kremlin’s Crimea annexation by far biggest playing field for commercial and also military business projects in aviation.

Dmitry Kiva, ousted Chairman of the Antonov conglomerate, but reinstated boss of the affiliated Antonov Company, speaks of “more than 100 million dollars” his entity lost as a result of the Crimea takeover by Russia. This outlaw practice that violates international law “makes any further cooperation with Russian enterprises impossible,” he stated at the recent Farnborough air show.
These bilateral industrial activities accounted presumably for over 50 percent of Antonov’s yearly turnover in the international business segment, European aviation experts estimate. So it’s no big surprise that the net profit achieved by the enterprise slumped by 54.7 percent in the first half of 2014 on annual comparison, totaling €1.7 million.

Amidst the many negative developments Antonov was and still is facing day by day - one source of income remains very solid: The steady cash flow coming from Ruslan Salis GmbH. This 2006-formed and Leipzig-based joint venture between Ukrainian capacity provider Antonov Airlines and Russian privatized Volga-Dnepr Group (50/50%) is performing like clockwork, confirmed a manager when asked by CargoForwarder Global. Despite the constantly deepening rift between Russia and the Ukraine both contractual partners provide coordinated transport solutions by deploying their An-124-100 fleets in accord with the uplift needs asked for by their NATO and EU partners.

Canada’s Trade Minister Ed Fast  / source: Canadian Gov’t
Canada’s Trade Minister Ed Fast / source: Canadian Gov’t

However, the smooth functioning of Ruslan Salis is only a small chink of light from Antonov’s perspective. This is all the more so, as other initiatives and projects to get the foot in the door to new markets might be quite hopeful, but are still in their infancy stages. This does particularly affect the ambitious An-178 program – a freighter for small and medium-haul routes that’s capable of carrying up to 18 tons. According to Boeing’s latest Commercial Outlook there is growing demand from companies all around the globe for smaller and mid-sized freighter aircraft.

As manager Kiva announced, the maiden flight of the An-178 is slated to take place at the beginning of next year. Evaluations by Antonov reveal a market demand for this specific cargo transporter of 200-plus aircraft within the next seventeen years.

Asked about any orders Oksana Trofymchuk of Antonov Company’s press department said that at present her firm hasn’t yet got a single firm order for the An-178 freighter yet. At Kiev-headquartered aircraft producer Antonov they all hope this will change fast. 

Meanwhile, the Ukrainian aviation industry turns their eyes towards Canada as result of a visit of leading Canadian politicians, headed by Ed Fast, Ottawa’s Minister of International Trade. During their stay, the delegation members made themselves familiar with Antonov’s aircraft development program. Concluded Ed Fast: 

“We have discussed the possibility of participation of Canadian enterprises in Antonov programs. As a government we support this interaction and we are interested in establishing cooperation between our aviation companies with Antonov in the segment of transport aircraft. I agree with Dmitry Kiva: we need to cooperate, but not to compete.”

Heiner Siegmund

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