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. Last Updated: 07/27/2016

Hailed Jet Engine Awaits Chance to Take Off

ZHUKOVSKY, Moscow Region -- Perm Motors and U.S. partner Pratt & Whitney are pitching their long-awaited PS-90A2 jet engine at the Moscow Air and Space Exhibition, but even as they sing its virtues, they acknowledge that production will not kick off for another three to five years.

A full-scale mock-up of the engine, which is designed to power long-range Russian airliners and transports, such as the Il-96 and Tu-204, is being shown to prospective buyers at the air show, which runs through Sunday in Zhukovsky, just outside of Moscow.

Perm Motors officials said, however, that "several tens of millions" of dollars more will need to be invested in the engine's development before it can be put into production, even as the commitment of Pratt & Whitney to the project is in doubt.

Ural Mountains-based Perm Motors is largely dependent on engine maker Pratt & Whitney for project financing, but the U.S. company has not made a final decision on whether to see the PS-90A2 project through, officials from Perm Motors said.

Perm Motors says the program will take three years to complete with Pratt & Whitney's assistance and five years to complete without.

"Pratt & Whitney is considering the situation right now," Alexander Semyonov, the chief designer of the PS-90A2, said. "They are thinking about how quickly their investment will pay for itself."

Pratt & Whitney has already invested roughly $125 million in its joint venture with Perm Motors to upgrade the original PS-90A, which first entered production in 1992.

Semyonov said that improvements in the PS-90A, which the new A2 modification is based on, has made it profitable for both Perm Motors and the airlines that use it, casting doubt on whether an upgraded version is really necessary.

"We'll look at how many planes will use the new engine, how intensively those planes will be used, as well as it's reliability and repair costs," Semyonov said. "Taking all these factors into account, we will do the financial calculations and convince ourselves that putting the money in is worth it - this is the question we are discussing with our American colleagues at the moment."

Pratt & Whitney officials present at the air show declined to discuss the PS-90A2 project, referring all questions to their counterparts at Perm Motors.

Aviation analysts said the PS-90A2 will go a long way toward solving problems like high fuel consumption rates and poor endurance and reliability that have dogged other Russian-made engines, including early models of the PS-90A.

Although the engine will not perform at the level of its foreign competitors, it is significantly cheaper, something its supporters are hoping will make it an attractive buy for hard-pressed Russian airlines.

The manufacturers have yet to put a price tag on the PS-90A2, but independent aviation analyst Paul Duffy said it will probably sell for around $2.2 million, about three times less than its nearest foreign equivalents.

"Perm Motors has tried to give good value for the money, lowering the price to compensate for lower performance," Duffy said.

Perm Motors officials said Russian airlines are already showing significant interest in the PS-90A2, despite the uncertainty about how long the final development phase will last.

"To date, over 20 airlines have expressed interest in acquiring the engine," Pavel Tretyakov, the project's lead engineer, said.

In the past, Russian aerospace manufacturers have announced large orders for their products, only to see them evaporate when airlines failed to come up with the money needed to complete the deals.

Perm Motors has introduced a leasing scheme for the PS-90A model currently in production, in which airlines pay a fixed fee for each hour the engine is flown, while the manufacturer assumes responsibility for all maintenance work.

Even though the terms work to airlines' advantage, only three aircraft are in service with the latest PS-90A engines in a complicated barter scheme in which Perm Motors receives planes as payment for its engines and then leases the aircraft to airlines.

"Right now this scheme is actually hurting them," Duffy said. "You're only getting $100,000 to $150,000 each month from the three planes that are signed on to the deal, but you have to pay to maintain the engines.

"If you have no choices, this is the least worst one," he said, adding that if enough airlines signed up for the leasing deal, it could be profitable for Perm Motors.

Yefim Gordon, an independent aviation analyst, said the A2 modification would probably be able to take a lead position on the Russian market, but added that the market is so weak at present that it is not clear whether the PS-90A2 will be profitable.

Only a handful of new Russian jetliners have been sold in the last several years, and there is little sign that sales will pick up anytime soon. However, Perm Motors officials said that they expect orders from airlines that want to upgrade engines on existing planes.