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. Last Updated: 07/27/2016

Loss of Jets Will Hurt Aeroflot, Lebedev Says

bloombergA worker passing a 777 engine at a plant in Washington that will build 787s.
Aeroflot shareholder Alexander Lebedev said Thursday that the airline would lose market share to competitors because it missed a deadline for ordering Boeing's new 787 passenger jet.

"We either won't fly at all or we'll fly old airplanes,'' Lebedev said. "We will be losing markets."

Delays by government officials forced the carrier to miss a Nov. 1 deadline for securing delivery in 2010 of the 22 Boeing planes it wanted to buy. Aeroflot, which joined the SkyTeam alliance of Air France-KLM Group and Delta Air Lines in April, has said it needs to start replacing its aging fleet in 2010 to stay competitive.

Lebedev, who is also a deputy in the State Duma, owns 30 percent of Aeroflot and the government owns 51 percent.

Lebedev tried to save the Boeing deal by reserving production slots himself to give government officials more time to make a decision. That accord, which Lebedev's company National Reserve signed on behalf of Aeroflot, expired Nov. 1.

Boeing returned his $40 million deposit, though the gesture cost Lebedev $1 million in lost interest, he said Thursday.

President Boris Yeltsin's son-in-law, Valery Okulov, who runs Aeroflot, said in Beijing on Thursday that Aeroflot would not be able to get Boeing 787s before 2014 because of the missed deadline, Interfax reported.

Aeroflot has considered ordering 787s or Airbus' proposed competitor, the A350, for more than one year. The airline's board delayed the decision Sept. 15.

"This is our estimate given the current situation on the market,'' said Okulov's deputy, Lev Koshlyakov, declining to elaborate.

Three days earlier, Aeroflot's management said it wanted to buy 22 aircraft from Boeing and 22 from Airbus. That decision came after state-owned lender Vneshtorgbank bought 5 percent of Airbus' parent company, European Aeronautic, Defense & Space, for about $1.28 billion.

Aeroflot has said it needs to replace its older Boeing 767s and Soviet-build Ilyushin. Il-96 long-range planes starting in 2010.

Yet the decision on the new fleet has been complicated by the worsening political climate between Russia and the United States and Russia's recent moves to foster closer cooperation with EADS and other European aerospace companies.

"The government has to explain to the Kremlin that we will not have planes to fly or we will have to fly old, unsafe planes,'' Lebedev said.