Updated July 16, 2008

   Within international air show, "Farnborough 2008", in England Russia’s Oboronprom United Industrial Corporation (UIC) and Italian helicopter producer AgustaWestland (AW) have signed a framework agreement about joint venture establishment to produce helicopters. As it is stated in the parties’ press release, the core task of Oboronprom and AgustaWestland venture is organization of AW139 helicopters assembly in Russia.

   The companies declared about Oboronprom and AW large-scale cooperation in May current year within international exhibition HeliRussia-2008. However, then it was envisaged that Oboronprom would distribute AgustaWestland helicopters in Russia and CIS countries, as well as establish some maintenance centers to support this company equipment in Russia. Now the parties have agreed about medium-twin engine helicopter assembly, AW139, in Russia. According to AgustaWestland chief executive Guiseppe Orsi, AW139 assembly establishment in Russia permits the company to satisfy the constantly growing demand for this type of helicopters at the market, as well as expand its presence at the markets of Russia and CIS countries.

   As considers Oboronprom director general Andrey Reus, "this agreement signing means positions consolidation of Russia in the world aviation cooperation system. Within the framework of this mutually beneficial cooperation, Russian helicopter producers will get access to new technical and production solutions, as well as high quality standards of helicopters’ maintenance". According to Mr. Reus, the Russian party will gradually aim at localizing this helicopter type production in Russia, but now, it goes about establishment of SKD (semi knocked down) AW139 on one of the fields in Moscow area (probably, on Kamov JSC base). It permits to cut the helicopter price that is able to carry up to 15 passengers, and is used as a corporate-transport and VIP helicopter. Now AW139 average price in Europe is €11 million.

   An assembly venture in Russia will be established pari passu. Total project cost is €40 million. AgustaWestland representatives will act as a head and a financial director of the joint venture. As it is expected, production will be launched in 2010, and it is planned to supply first helicopters to consumers in 2011. As per calculations of the parties, the project recoups its costs within 5 or 6 years.

   It is unclear yet, how such agreement and AW139 assembly launch will influence development strategy realization of the Russian helicopter industry. According to Oboronprom head, Andrey Reus, sales of Russia’s helicopter facilities grow by 20-30% annually and by 2010 Russian Helicopters Corporation wants to supply its customers with around 280 machines (7-8% of the world market) a year. Thus, development of seven projects, such as Mi-8М, Mi-38, Ka-226, Ka-62, Mi-54, Mi-28N and Ansat, designed and produced at Kazan Helicopter Plant, is of high priority. Thus, according to Mr. Reus, an engine for each type of helicopters has already been elaborated and approved.

   However, in sector experts’ opinion, in fact, Italian AW139 operates in the same class, as Russian Ka-62. Sources in Oboronprom mark that these machines differ in cost and useful qualities, and the agreement signed with AgustaWestland does not impose restrictions on the Russian projects’ development in this class (except for other helicopter productions with 6-7 tons take-off weight coupled with the foreign partners). Such situation development will obviously depend on how successfully Russian-Italian made helicopters will be sold. By initial idea, they are produced for the markets of Russia and CIS countries. However, their export to other countries is possible in terms of machines excess at the internal market or shortage at the external one. In case, the Italian company feels an AW139 competition challenge from the part of the Russian helicopter producers, it can raise a point about revision of the already made agreements. There are precedents for this: earlier one of the conditions of joint venture establishment in motor industry between General Motors and AvtoVAZ was GM requirement to stop production at Tolyatti Car Plant of one of the most successful developments of the Russian motor industry – Niva 4×4.