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. Last Updated: 07/27/2016

Boeing Agrees to Give Russian Aviation a Lift

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The country's struggling space and aviation industry got a big shot in the arm Friday when Boeing and the Russian Aviation and Space Agency announced ambitious plans to jointly develop satellite launches, space modules and a new airliner.

"We have begun our journey together with small steps and achieved some very great things," Boeing chairman and chief executive Philip Condit told reporters. "The agreement we signed today opens the road to achieve even greater things in many areas in space and in aviation."

Condit and Russian Aviation and Space Agency head Yury Koptev refused to say how much money would be invested in the projects.

The deal comes just days after Russian aviation officials met with European aerospace giant EADS at a German-Russian summit in St. Petersburg to negotiate a $2.3 billion contract to make parts for planes built by Boeing's arch rival Airbus. The German business weekly Handelsblatt reported Tuesday that a framework contract has been reached and a detailed agreement was expected to be signed in June.

It was unclear what impact the Boeing deal would have on any contracts with the European Aeronautic, Defense and Space Co.

The framework agreement signed by the Russians and Boeing on Friday calls for the development of a 100-seat airliner with business and economy classes, Deputy Prime Minister Ilya Klebanov said after meeting with Condit.

"When you look just at the Russian market, the need for a good regional jet is very strong. This is also true of the world market," Condit said. "We believe that the Russian aerospace industry, if combined with the market knowledge and some of the skills of Boeing, could produce a very interesting airplane."

Analysts estimated there is a market for about 600 such aircraft through the former Soviet Union, with 200 to 300 in Russia alone.

Klebanov said it will take five years to jointly develop a regional airliner, feasibility studies for which are now under way. It has yet to be decided which plant will get the contract to build the planes. Boeing said it would provide leasing finance services, market the planes and help get international safety certification for them.

The Russian aviation industry has for some time toyed with the idea of a regional jet. Most recently, jetfighter maker Sukhoi and U.S.-based Alliance Aircraft Corp. hammered out a deal to build a family of 50- to 90-seat aircraft under the name StarLiner. But the plan, which would have seen the first planes hit the market in 2003, fell through under unclear circumstances last year.

Sukhoi general director Mikhail Pogosyan, who attended the signing ceremony Friday, did not utter a word about the new passenger jet project.

Alexei Komarov, editor of the Air Transport Observer magazine, said the project was "strange" given that Boeing does not have a regional jet of its own and the competition on a market filled with Brazilian Embraers, Canadian Bombardiers and U.S. Fairchild Dorniers is already high.

Komarov added that with an EADS contract nearly clinched, the Boeing deal was the last chance for Russia to integrate into the world aviation industry.

Viktor Livanov, Ilyushin's general director, said that while the new project reminded him of the ill-fated Sukhoi deal, he felt confident that developing the regional jet under "Boeing's umbrella" would allow it to break into world markets within five to seven years.

"Boeing is giving Russian aviation an opportunity to start facing the world market," agreed aviation analyst Paul Duffy. "This is the first glimmer of really good news that means aviation has at least a medium-term future."

Boeing and the Russian Aviation and Space Agency also agreed Friday to work together in marketing a Russian-designed module for the international space station, and they signed an accord paving the way for commercial launches of the Ukrainian-designed Zenit rocket from the Baikonur Cosmodrome. A deal was also signed to jointly develop new liquid fuel engines.

Kari Allen, spokeswoman for Boeing's Houston office, was quoted by Space News as saying Thursday that Boeing may help finance the completion of the ISS module, known as the Functional Cargo Block 2, or FGB-2.

Anatoly Medevdev, chief of the Khrunichev rocket maker, said Friday that a final deal on the commercial use of the FGB-2 could be signed within two months, adding that the module was 70 percent complete and needed 18 months to finish.

The module would be launched, owned and operated by Khrunichev and Rosaviakosmos, Allen said. Boeing would have the rights to sell space aboard the capsule, she said.

The FGB-2 is a follow up to the FGB Zarya, which the Khrunichev State Research and Production Space Center built under a contract with Boeing and successfully launched to the ISS in December 1998.

Koptev said the two sides are also considering launching loads from the Baikonur Cosmodrome in Kazakhstan with a two-stage version of the Zenit rocket. Sea Launch, a U.S.-Russian-Ukrainian venture led by Boeing, currently uses a three-stage version of the rocket.

Koptev did not elaborate on the commercial details of the deal for the module and the two-stage Zenits.

Condit said only: "We agreed to look into the opportunities and try to take advantage of the capabilities that are in the FGB and the Zenit launch vehicle and find the best commercial answers."

Boeing has worked in Russia for seven years and invested about $1 billion here.