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. Last Updated: 07/27/2016

Chinese Mull Aircraft, Engine Deal




A deal is in the works with the Voronezh aviation plant that makes Ilyushin aircraft and the Urals-based engine manufacturer Perm Motors to provide planes and engines for a Chinese airline, officials confirmed Wednesday.


Analysts say the planes retail for about $30 million and the engines for about $2 million and estimate the deal could be worth up to $100 million.


A delegation of China Xinjiang Airlines and Chinese civil aviation administration representatives visited both plants earlier this week with the intention of acquiring three Il-96-300s to replace their existing three Il-86s and aquire 15 additional PS-90A engines.


The delegation came to examine both the plane and the engine. However, details of the deal have not been finalized, said Perm's deputy general director for marketing, Mikhail Dicheskul, in a telephone interview.


"Our safety and resource parameters seem to have satisfied them and [we] are working toward a deal," Dicheskul said. "We expect another visit [from them] in August when the details will be discussed."


Dicheskul said negotiations with the Chinese team began early this year and the factories received their first visit in May.


Both Aviaexport, which is brokering the deal, and Ilyushin officials confirmed that negotiations are under way but refused to comment further.


Industry analysts said a deal with China, even a minor one, would be valuable for the plants, which are starved for orders.


Alexei Komarov, editor in chief of Air Transport Observer magazine, said the pending deal is good for both producers, but its small size highlights the plight of civil aviation producers struggling to boost export contracts.


The Voronezh plant is waiting for the government to provide guarantees so that Aeroflot can obtain a loan to lease six more Il-96-300s. The plant has delivered 10 Il-96-300s domestically, six of which went to Aeroflot, since the plane was certified in 1993.


Perm Motors, which has had no new aviation engine sales since 1998, concentrates mainly on repairs, Dicheskul said. The company is looking forward to the deal and is 90 percent certain it will be signed. An order for three engines from Rossiya State Transport, the company managing the presidential fleet, was postponed until next year.


The PS-90A engine, which entered mass production in 1989 and of which over 160 have been built, has experienced operational problems that are gradually being solved with the assistance of U.S.-based Pratt & Whitney, which has invested $125 million in Perm Motors.


If the Chinese proceed, it would be the first foreign sale of a PS-90A engine. Domestically, engines are in service on 10 Il-96-300s and on five Tu-204 aircraft.