Boeing Wins Coveted Aeroflot Tender

Boeing won a tender to supply Aeroflot with up to 65 midrange jets, the U.S. jet maker announced late Monday, beating out stalwart Airbus and the domestic United Aircraft Corporation.

State-owned industry holding Russian Technologies, which conducted the tender on behalf of Aeroflot, said in a statement Monday that Boeing submitted the best offer technically, operationally and financially.

The statement did not specify the number of planes that would be supplied, but Boeing spokesman Dmitry Krol said the terms of the tender, announced in August at the MAKS air show, called for the buyer to purchase 50 planes with an option to buy 15 more in the future.

Boeing welcomed the decision, saying the "selection of Boeing airplanes demonstrates [Russian Technologies'] commitment to deploying the optimal solution for its market needs,” the Seattle-based aircraft giant said.

The tender comes after Aeroflot reached a deal in December with Sukhoi, a unit of United Aircraft Corporation, in which it agreed to purchase 30 of the new, Russian-built Superjet 100s. The company is buying the Superjets and 737s to replace its aging midrange fleet of Airbus 320s and 319s.

In April, Aeroflot signed an agreement with Russian Technologies granting Aeroflot the rights to manage the airline assets of the state holding, which, in turn, received the rights to acquire and lease planes for the country's biggest airline.

The agreement was a precursor to a larger government plan to unite Russian Technologies' airline assets — Vladivostok Avia, Saratov Airlines, Sakhalin Airways, Rossia, Orenavia and Kavminvodyavia — with Aeroflot. Under a Transportation Ministry plan drafted last month, the government will transfer the airline assets to Aeroflot in exchange for an additional share issue from the airliner.

The ministry's merger plan came as a disappointment for Russian Technologies, which was hoping to get a stake in the unified carrier.

The Boeing purchase would be good news for the state holding, which also owns 66 percent of titanium maker VSMPO-Avisma. By purchasing plans from Boeing, which is the Russian miner's main client, Avisma will get more orders, said Andrei Rozhkov, a transportation analyst at Metropol.

Nevertheless, the tender was won by Boeing because Airbus was offering more costly contracts and UAC couldn't offer the right sized jet, Rozhkov said. “Sukhoi Superjet 100 produced by UAC has between 75 and 95 seats, which is insufficient for Aeroflot's domestic operation.” The Boeing 737 New Generation has between 140 to 215 seats.

But Aeroflot may have different ideas. A source in the airline told Reuters that Aeroflot is still considering leasing 15 Airbus 320s in the coming years in addition to the 16 aircraft that it has already agreed to lease over the next three years.

Aeroflot spokeswoman Irina Dannenberg directed questions regarding the tender to Russian Technologies. A spokesman for the state corporation declined to comment.

The statement didn't give any details on the price of the contract, but Rozhkov said Aeroflot could acquire five to seven jets per year at a cost of $40 million to $60 million each, depending on the options.

But much depends on how the merger of Aeroflot with the regional carriers proceeds.

“If Aeroflot gets the airline assets of the Russian Technologies, it will get enough planes at its disposal and will increase its market share using mainly these,” Rozhkov said. “If the deal fails, Aeroflot may need to acquire more planes to support its growth plans.”

In the long run, Russian Technologies said it will focus on domestically made aircraft, such as the Irkut MS-21, the Antonov AN-148 and the Sukhoi Superjet.

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