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. Last Updated: 07/27/2016

Hopes Lift Off With New Chopper

ROSTOV-ON-DON -- Russia's most modern combat helicopter clattered over an airfield on its maiden flight last week, drowning out the "It will show hell to the enemy with enough guided missiles for the NATO tanks" song that blared from loudspeakers.

Manufactured by Rostov-on-Don Helicopter Plant, or Rostvertol, the Mi-28N Night Hunter is the new centerpiece of the domestic helicopter industry, which the government is planning to consolidate along similar lines as the airplane industry.

Capable of functioning in all weather conditions and equipped with new avionics and weaponry, the Mi-28N is Russia's answer to the U.S.-made Apache helicopter gunship.

"This calls for celebration in the Air Force. In a rather short time we created the most advanced combat helicopter," said Air Force chief commander Vladimir Mikhailov.

The Air Force plans to order up to 300 Mi-28Ns, with 50 to be delivered by 2010, he said. The gunship would gradually replace the current fleet of Mi-24 attack helicopters.

Mikhailov said that the Air Force will also use the Mi-28N's domestic rival, Moscow-based Kamov's Ka-52, but in far smaller numbers and mainly to help boost its export potential.

The commander has on several occasions suggested that the Air Force will be leaning away from a multitude of procurement programs and focus its budget on only the most promising products.

Mikhailov's statements echo a plan for consolidating the helicopter industry, submitted to the government last week by Boris Alyoshin, head of the newly created Federal Industry Agency, which oversees the defense sector.

According to the draft, which was shown to The Moscow Times, all Mil helicopter manufacturers would be combined into a holding called Mi Helicopters. The state would have a controlling stake in the holding's management company, which in turn would consolidate government shares in each of the contributing companies.

The holding's product range includes Mi-8 transport helicopters with modifications, modified Mi-24 gunships, large transport Mi-26 choppers and the new Mi-28N.

The move is aimed at reintegrating the sprawling but customer-dry companies which the government lost control of in the post-Soviet decade.

The draft calls for pursuing a single marketing policy and eliminating internal competition; concentrating corporate cash on the development of new helicopters; and the guaranteed fulfillment of state arms procurement plans.

Last year Mil helicopter producers made combined revenues of $600 million, mostly from exports, according to the Center for Analysis of Strategies and Technologies.

"The idea is to have a manageable vertically integrated structure," said Denis Manturov, general director of Oboronprom.

Oboronprom was set up in 2002 by the government and state arms-selling agency Rosoboronexport to oversee government defense assets and acquire stakes in private defense firms.

Oboronprom would perform the managing functions of the new chopper holding. It already holds stakes in the Ulan-Ude plant, Sukhoi design bureau and Defense Systems air defense company.

Upon approval of the draft, Manturov said, the government will evaluate all of its helicopter assets and allot shares in the holding to its would-be members.

Industry experts have said that firms that drifted apart and have become majority private may be difficult to push under one roof -- an effort that has repeatedly failed in the past.

But at an extraordinary shareholder meeting in March, totally private Rostvertol voted in favor of a share issue that will eventually allow the state to have a blocking stake in the company.

"We need that to be more efficient, to have a single policy in marketing and pricing," Boris Slyusar, general director of Rostvertol, said.

The plan to consolidate the helicopter industry mirrors the recent plan to create the National Aircraft Building Corp., which will bring together state-controlled MiG, Sukhoi, Tupolev, Ilyushin and private Irkut jet manufacturers in one holding.

As envisioned in the draft, the chopper holding would take stakes of 31 percent in designer firm Mil Moscow Helicopter Plant, 29.92 percent in Kazan Helicopter Plant, 25 percent plus one share in Rostvertol, 49 percent in Ulan-Ude Aviation Plant and 38 percent and 60 percent respectively in two helicopter component firms, Vperyod in Moscow and the Stupino Machine Building Production Enterprise.

The chief executives of the named companies "all signed off on the draft concept last December, said Yury Andrianov, head of Mil Moscow Helicopter Plant.

The government has not said whether the holding would also embrace Mil's competitor, Kamov. "Maybe at a later date," Alyoshin said last week.

Konstantin Makienko, deputy head of the Center for Analysis of Strategies and Technologies, said that the holding company will only work if the state accumulates controlling stakes in all the contributing companies.

"It will then have a real leverage and will be able to funnel revenues into priority innovation products," he said.

Sergei Nedoroslev, president of Kaskol Group which has 25 percent plus one share in the Ulan-Ude plant, said the single management will eliminate internal competition. Currently the Ulan-Ude and Kazan plants make various modifications of the same Mi-8/17 helicopter.

A manager at the Kazan Helicopter Plant, who spoke on condition of anonymity, cast some doubt on the practicality of the plan.

"We are not against the concept, but how will it work in reality? It's easy to put together a monster, but what will you do next? It is not yet clear and we need stability," he said.

Makienko noted, however, that had consolidation come earlier to the chopper industry, a more targeted use of resources would have led to the completion of the Mi-28N project much sooner.

Although the Mil Moscow Helicopter Plant began work on the Mi-28N in 1993, the project was faced with continuous cash shortages until Rostvertol put up its own money two years ago.