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. Last Updated: 07/27/2016

MiG Sees Business Take Off in 2001

MTMiG's biggest contract this year would be a $437 million deal with Yemen for 14 MiG-29s, though the company has not confirmed it.
In what one industry watcher called a "miracle" turnaround for a company considered by many to be unsalvageable just two years ago, Russian Aircraft Corp. MiG said Friday it had sealed deals worth $1 billion this year, up tenfold compared with 2000.

"We have signed $1 billion worth of contracts for MiG-29 jets and services this year," Nikolai Nikitin, general director of state-owned RSK MiG, told reporters.

Nikitin said 2001 was the best year for MiG since Soviet times, adding that it had not received a single order from the Defense Ministry in nine years, relying on scant exports for 90 percent of its revenue.

Prior to 2001, MiG hadn't signed a big export contract since 1995, when it delivered 18 MiG-29s to Malaysia for $650 million, part of which was paid in palm oil.

This year, MiG signed five major contracts for 36 jets, as well as several smaller contracts for support services and spare parts, Nikitin said. The largest contract -- a $437 million deal with Yemen for 14 MiG-29s -- has been widely reported, although MiG has refused to confirm it.

It did confirm, however, that it had signed a $150 million, 10 MiG-29 deal with Myanmar earlier this year. Nikitin said one major contract was signed Dec. 15, but he wouldn't elaborate.

Nikitin said MiG expects to get contracts worth a total of $7 billion this decade, more than half of which will come from military exports.

Rival Sukhoi already has secured $7 billion worth of orders in the last three years alone.

"We are seeing the beginning of a miracle," said Konstantin Makiyenko, deputy head of the Center for Analysis of Strategies and Technologies, an independent defense think tank. "In 1998 to 1999, MiG was lying in ruins," he said. "[The new management] has done the most important thing -- they stopped theft."

A new team including top managers Nikitin and first deputy Vladimir Barkovsky, both former employees of Sukhoi, took over the debt-ridden enterprise after its accounts were frozen two years ago.

"When we came in 1999, the production line was fully grounded, wages hadn't been paid for up to eight months," Nikitin said. "We had a choice of either [going out of business] or diversifying."

MiG chose diversification, branching into civil aviation, including working on the development of the 100-passenger Tu-334. MiG hopes to certify the plane in 2003 and start mass production in 2004.

Eventually, Nikitin said, as much as 70 percent of MiG's production capacity will be dedicated to civil craft.

Nikitin lamented the fact that MiG is still largely a one-product company, although it plans to continue to produce and upgrade versions of that product, the MiG-29, through 2030.

With more than 1,000 MiG-29s worldwide outside of Russia, MiG is also hoping to continue winning modernization contracts. Earlier this year, Hungary chose it to update half of its fleet of 27 MiG-29s, and MiG is currently bidding to upgrade 21 Bulgarian MiG-29s.

Makiyenko said there is little chance or little money for MiG to cash in on upgrades elsewhere in Eastern Europe but that it shouldn't miss an opportunity to refit India's fleet of 70 MiG-29s.

With Russia finalizing a contract to retrofit and deliver its Admiral Gorshkov aircraft carrier to India, MiG is expected to get up to $1.5 billion to build a batch of MiG-29Ks as part of the contract.

Also on the domestic front, MiG is working on ways to modernize the air force's fleet of MiG-29s.

But the biggest prize for MiG -- and Sukhoi -- is Russia's next-generation fighter, the winning bid for which is expected next year.

Yury Koptev, head of the Russian Aviation and Space Agency, has said repeatedly that Sukhoi is the favorite.

"MiG's chances are increasing due to the financial strengthening of the company. They have performed one miracle, maybe they will perform another one," Makiyenko said.