Wednesday, May 25, 2011

Spin It: Russian Helicopter Industry

by Kirill Belov

What has been one of the most successful in recent years, domestic engineering industries relating to its defence and civilian sectors? How to track the development of new rotorcraft and ordering available helicopters?

Before the exhibition HeliRussia-2011 Russian helicopter decided to report on progress. Gathered at a press conference in agency "Interfax" industry generals, headed by the Deputy Minister of Industry and Commerce Dennis Manturov provided reporters a detailed report on the state of affairs in the field of rotorcraft technology.

New and old machines

At HeliRussia-2011 it is planned to show the new Mi-38  with engines of Pratt & Whitney. With domestic engines TV7-117V helicopter is already shown in last summer. In addition, the CEO of the holding company "Helicopters of Russia”, Dmitry Petrov, drew attention to the modification of the helicopter Ka-226T with a motor Arrius 2G company Turbomeca, at the recreated Mi-34S1, as well as Mi-171M, which is expected to be staged in a series from 2014.

Chairman of the Board Helicopter Industry Association Michael Kazachkov noticed that the forum HeliRussia not going to close on domestic machines, gradually turning into a significant international forum. For example, according to Kazachkova on upcoming showroom will debut in Europe shows R66 Helicopter Company Robinson Helicopter (turbine version of the machine R44).


Appetite comes with eating

As stressed by Dmitry Petrov, "Russian Helicopters" in value terms, now occupy 14 percent of the world market rotorcraft, and the production of the holding is 13 per cent are operating throughout the world rotorcraft technology. For Russia and the CIS, the share reaches 87 percent. Over the past three years the company has doubled its annual output of cars, bringing it up to 214 units in 2010.

The overall plan only under orders of the Russian Defense Ministry in 2020 than 1000 helicopters with the planned annual rate of shipment of 120 to 160 machines per year (reaching the last digit, however, accurately classified by the end of the current state program of armament).

Judging from the data that CEO Oboronprom Andrei Reus informed those present at the press conference, the total volume of planned production rotorcraft technology at least twice as large as indicated above, the defense state order. After the release of 214 helis in 2010, "Russian Helicopters" prepared in 2011 to ship 264 rotorcraft, and in 2012 - over 300. It only remains to be glad for the corporation, has shaped a strong and diversified portfolio.

On the question of whether there will be enough for domestic military reservation engines, Andrei Reus said evasively, saying that engine specialists of helicopter sector operate in a highly competitive environment. "We are already working with engines Pratt & Whitney, Turbomeca, with Motor Sich and so on" - Reus said, pointing out that such a broad range of potentially suitable samples removes the problem with bundling helicopter engines.

This subtle point is a series of new assumptions. For example, does not mean there is so vague answer that the Russian Defense Ministry has already internally poised to order machines, staffed by Western-made engines? Or not whether these words are de facto recognition of the fact that domestic motorists are not yet able to cope with the planned "waterfall" defense contracts for helicopters?


Projects, improvements, expectations

But domestic state orders helicopter did not intend to be limited. According to Dmitry Petrov, awaiting final modifications are two existing machines: the Ka-226 Ka-52, moreover the requirements of the Ministry of Defense are such that according to the results of modification it would be possible to freely use both rotorcraft from any ship whose construction is written in the LG-2020 . "Including Mistral" - added Petrov. In addition, the 2017-2018 year, according to CEO, should appear and a new perspective for the carrier-based  helicopter naval aviation.


On the issue of development activities on high-speed helicopter, Dmitry Petrov said that they had just begun and will take three years. They are conducted, as is typical, according to ministry's order. When Petrova was asked about what the position of the military department with respect to this project, he noted that the Ministry of Defense shows some interest, but in the specific contractual form is not yet expressed. Denis Manturov added that current plans for a three-year R & D on high-speed helicopter will be allocated 3.5 billion rubles, of which 400 million - later this year.

Dmitry Petrov had noticed that it was possible to obtain from the Ministry of Defense transition to 'long' contracts (previously they were only for the current year), which greatly simplifies the work with subcontractors  in the organization of production-volume orders.

Particular attention was paid to the prospects of the market of civil systems.According to Michael Kazachkova, the adoption of new legislation to regulate air traffic can give a powerful impetus to this segment. New rules for 128-FAP greatly expand its capabilities, and include, for example, the notification procedure works on commercial aviation and general aviation, as well as resolution of night flights in the Central Federal District, previously available only for public operators helicopters.


IPO did not take place. fortunately?

Naturally, it was impossible to ignore the question that IPO (Russian Helicopters) have just recently been postponed indefinitely. According to Andrei Reus, this delay only for the better, since it would more adequately evaluate the success of "Helicopters of Russia" made recently. "We have a number of indicators that have surprised many," - he explained, pointing out that the extension will only increase the company's valuation.

"In terms of EBITDA we occupy first place in the world helicopter market," - said Dmitry Petrov. "The valuation of assets is deemed unfair, which led to the postponement pending a more fair assessment" - summed up Denis Manturov.

Earlier, the media reported that one of the reasons for the delay can be a complicated situation on the market. Recall that controls the holding Oboronprom intended to receive from the IPO approximately $500 million, half of them leave for itself and others to reinvest in the company. Money was planned to be spent on restructuring debt and repurchase shares of its subsidiaries. However, in this case, the total valuation of business "Helicopters of Russia" would have been announced in April at the offering price from 1,8 to 2,4 billion dollars, that obviously is an underestimation of the real value of industrial and intellectual assets of the concern.


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