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Russia’s Sukhoi eyes big jet (100 SS-100) deal with Chinese company


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Russia’s Sukhoi Civil Aviation has reached a preliminary agreement to supply up to 100 Superjet-100’s to China in what would be by far the biggest sale yet of its flagship regional passenger jet. Apart from swelling Sukhoi’s order books, a Chinese deal could help Russia circumvent possible western sanctions.

Sukhoi Civil Aviation signed a memorandum of understanding (MOU) to sell up to one hundred Superjet-100s to O’Bay Aircraft, a privately held airline based in Henan province in north China. As part of the deal, the two sides are considering a joint assembly venture to make SSJ-100’s in Zhengzhou, the capital of Henan province.

“So far we only have a memo of understanding (with O’Bay),” Marina Motornaya, spokeswoman for Sukhoi Civil Aviation, said on Tuesday. “We’re considering any options.” In China, MOUs are treated as a warm up to substantive negotiations on deal terms, meaning that many MOUs fail to be implemented.

The deal is potentially complicated by Sukhoi’s collaborations with western manufacturers at a time of potential western sanctions on Russia for its annexation of Crimea. THe SSJ-100 was developed in co-operation with Boeing and is packed with imported US and European technology. Engine parts supplied by France’s Snecma, electronics from Thales, US Goodrich made brakes could all be vulnerable if the sanctions materialise.

The MOU is “an important stage in promotion of the SSJ-100 in the Chinese market,” Sukhoil Civil Aviation said in a statement on Tuesday. “The Chinese side is interested not only in buying new aircraft, but also in the implementation of large scale deals to develop local aviation infrastructure in offset programs.”

Capable of seating up to one hundred passengers, the SSJ-100 is the first passenger aircraft to be developed in Russia since Soviet times.

Russia has set a goal to restore its neglected civil aviation industry and capture 10 per cent of the world’s regional passenger jet market by 2025. Launched in 2011, the SSJ-100 is a first step in that direction.

Russia with its vast land mass and ill developed road network is a promising market for regional jets. Aeroflot, Russian national airline, has replaced most of the old Russian-made planes in its fleet with US Boeings for use on long haul flights but has bought ten SSJ-100’s for domestic and CIS routes.

Sukhoi entered an agreement with Alenia Aeronautica, a subsidiary of Italy’s Finmeccanica, its minority shareholder, to market the SSJ-100 internationally in 2008. But the Russian aircraft has met strong headwinds from established regional jet makers such as Canadian Bombardier and Embraer of Brazil.

There have been some success stories – Indonesia’s Sky Airlines and Lao Central are flying SSJ-100s – and some setbacks. Armenia, the first foreign customer for the SSJ-100, sent back the plane after finding it could not afford spare parts.

A deal with O’Bay would open the door for Sukhoi to the fast growing Chinese passenger jet market and dramatically improve the SSJ-100‘s prospects.

China is promoting the development of its own aviation industry and is pushing Sukhoi to agree to an assembly venture.

Sukhoi needs to move carefully. If the SSJ-100 is built in China it would lose the prestigious “made in Russia” label. And there’s a risk that the Chinese would use the venture as a learning experience, copy SSJ-100 technology and turf Sukhoi out.

Threats by the US and the European Union impose sanctions to punish Russia’s for annexing Crimea could help tip the scales in favour of an assembly venture rather than a straightforward export deal. China has remained above the fray in the Crimea furore and traditionally views sanctions as counterproductive.

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