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. Last Updated: 07/27/2016

Lebedev Extends Aeroflot's 787 Deal

bloombergA Dreamliner model earlier this year in Singapore. The first planes of Aeroflot's $2.5 billion order are to arrive in 2010.
Aeroflot's largest private shareholder, Alexander Lebedev, said Tuesday that he had signed a deal with Boeing to reserve production slots for 22 Boeing 787s.

Lebedev said his National Reserve Corporation, which owns about 30 percent of Aeroflot, would pay Boeing up to $40 million to extend a tentative contract for the jets.

The deal gives the government, the airline's main shareholder, until the end of the year to make a final decision on whether to buy Boeing or Airbus jets, or a combination of both.

"This is the way to satisfy the interests of all parties," Lebedev said by telephone.

Aeroflot deputy director Lev Koshlyakov welcomed Lebedev's intervention. "This allows us to postpone a solution to the problem," he said.

He said the agreement cemented terms set out in the tentative contract, including a discount of about $10 million per plane. The entire order is worth about $2.5 billion. The first deliveries are scheduled for 2010.

Koshlyakov could not say when Aeroflot's board would meet again to discuss the purchase. The board failed to agree on the order at a meeting Friday.

Boeing spokeswoman Olga Kostrubina declined to comment on the deal, saying only that "we continue our work with Aeroflot."

Lebedev's company will transfer the $40 million down payment within the next three days, Interfax reported.

The deal is a sign that Lebedev and the state have different goals, said Rostislav Musienko, a transportation analyst with BrokerCreditService.

"The state is seeking to resuscitate the aviation industry, while Lebedev is interested in developing the company and raising its value," he said, linking the state's efforts to its interest in EADS, the maker of Airbus jets.

State-owned Vneshtorgbank recently snapped up 5 percent of EADS, and the Kremlin has expressed interest in acquiring a blocking stake. EADS, however, has ruled out the possibility of Russia being given a say in its activities.

Industry insiders expect President Vladimir Putin to use the Aeroflot order as a bargaining chip to entice EADS, the parent company of Airbus, into closer cooperation when he visits France later this week.

Lebedev said he doubted that the delay in placing a final order was linked to the EADS affair or to politics. National newspapers have linked the government's indecision to Kremlin anger over U.S. sanctions last month on the main state arms exporter and Sukhoi.

Lebedev blamed the delay on "bureaucratic ineffectiveness."

"They hate each other," he said of government officials. "Nobody is thinking about the airline."

The six state representatives who sit on Aeroflot's 11-member board vote according to a government directive put together by the Federal Property Management Agency and signed by Prime Minister Mikhail Fradkov.

Lebedev said the position of Viktor Ivanov, Aeroflot's chairman and an aide to Putin, "was strictly formal" meaning the board cannot vote without the directive.

Lebedev said his lawyers were looking into the possibility of suing the government over the delay and whether there was a way to revoke the directive.

But "it's not that easy to sue the prime minister. You can only prove losses when they have been received," Lebedev said. "So we are waiting for the directive."