Analytics Publications

President Vladimir Putin has signed a decree on the establishment of a joint stock company to be known as the United Aircraft Construction Corporation. The state will hold not less than 75% of the shares in the corporation.

It is widely expected that the following aircraft construction companies will merge to form the corporation:

• Kazan Aircraft Production Enterprise;
• Sukhoi JSC;
• Ilyushin Aviation Complex OJSC;
• Russian Aircraft Corporation MiG;
• Komsomolsk-on-Amur Aircraft Production Association;
• Nizhny Novgorod Aircraft Building Plant Sokol;
• Novosibirsk Aircraft Production Association; and
• Tupolev PSC.

All of the companies will be removed from the State Registry of Strategic Enterprises. Kazan Aircraft Production Enterprise and Russian Aircraft Corporation MiG, being federal state enterprises, will be restructured as joint stock companies with the state holding 100% of their shares.

The merger procedure could take up to a year; the head of the corporation will be named by the end of 2006. The government has until April 1 2007 to decide on the corporation's non-state shareholders and determine their proportion of the share capital.

The corporation will be engaged in the production, sale, maintenance, after-sales service, upgrading, repair and utilization of military and civil aviation equipment. It will deal with state and non-state customers in Russia and abroad. It will also research, develop and implement new technologies in the field of aircraft production. The corporation will be divided into four divisions: military aviation, civil aviation, military and special transport, and parts and components.

The American corporation Boeing and the European Aeronautic Defence and Space Company have been seen as potential models for the new corporation, which has a projected annual turnover for 2015 of between $8.2 billion and $8.5 billion. By 2013 it is expected that production will have increased from nine civil aircraft a year to 120.