Aeroflot Order Split Between 2 Rivals

Itar-TassAeroflot pilots training in a model cockpit. The company is buying 44 jets for up to $9 billion to modernize its fleet.
IRKUTSK -- Aeroflot said Wednesday that it would buy long-range airliners from both Boeing and Airbus, a decision that will keep open Russia's options on international aerospace cooperation.

The decision to buy U.S. Boeing's hot-selling 787 Dreamliner will meet Aeroflot's need to strengthen its 90-plane fleet, while an extra order for Airbus' A350 XWB will support Russia's push to cooperate with Europe's EADS.

"What we are talking about is buying both Boeing and Airbus. From 2010 to 2012, 22 Boeings, and from 2012 to 2016, 22 Airbuses," Aeroflot chief executive Valery Okulov told reporters at an economic forum in Irkutsk.

Okulov said state-controlled Aeroflot had already closed tender talks with Boeing to buy 22 Dreamliners, while negotiations on buying the A350s would continue.

"We proposed to Boeing and Airbus that we proceed to preparing contract documents -- but with Airbus we will have to rework the terms," Okulov said.

Okulov's comments came after Alexander Lebedev, who owns 30 percent of Aeroflot through his National Reserve Corporation, said Tuesday that he had reserved the Boeings on behalf of Aeroflot to avert the collapse of the $3 billion purchase.

Okulov declined to comment on the combined cost of the order, which has been estimated at up to $6 billion.

Analysts say the business case to buy Boeing is compelling -- the Dreamliner has already got 377 firm orders and Aeroflot risked losing its place in line by delaying its decision any longer.

But, without backing from the Kremlin to opt exclusively for Boeing, Aeroflot has also committed to buy from Airbus even though the A350 is still at the design stage and has yet to receive a single firm order.

Deputy Economic Development and Trade Minister Kirill Androsov said the orders should soon get the all-clear from the agency which oversees state-controlled companies.

"The Federal Property Management Agency has completed its evaluation, and on the basis of it a directive should be issued and the [Aeroflot] board of directors will make a decision," Androsov told reporters.

Aeroflot's dilemma comes as the Kremlin seeks to build on a 5 percent stake in EADS, amassed by state-controlled Vneshtorgbank, into a strategic holding entitling Moscow to a say in running the European aerospace group.

EADS' French and German management team has rebuffed Russia's approach. Analysts say a strategic alliance with Russia could stymie EADS' pitch for a major contract to sell cargo aircraft to the U.S. military.

Russian officials say the EADS minority stake may be moved to the United Aircraft Corporation, a national champion that will group warplane makers such as state-owned MiG, Sukhoi and listed Irkut, in which EADS owns 10 percent.

The Kremlin's EADS push is likely to feature at talks in France on Friday between Putin, French President Jacques Chirac and German Chancellor Angela Merkel.