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Aeroflot to Sign Deal for 22 Airbus A350s; Boeing Contract is "Frozen"

Reuters
Thursday, 15 Mar 2007 | 11:27 AM ET

Russian airline Aeroflot will sign a contract in the next few weeks to buy 22 of Airbus's proposed new long-distance A350 planes instead of Boeing 787 Dreamliners, its chief executive said today.

"The contract for the 787s is frozen," Aeroflot CEO Valery Okulov said. "It's hard to say how deep that freeze is."

The move follows Russia's foray into Airbus parent EADS, the world's second largest aerospace firm in which Russian state bank VTB last year bought a five percent stake, and sends a chilly signal to Washington at a time of strained relations between the two countries.

In a speech that smacked of Cold War rhetoric, Russian President Vladimir Putin last month accused Washington of seeking to dominate the world.

As recently as late February, Russian Economy Minister German Gref would not rule out buying Boeing aircraft.

Boeing planes make up 81% of the foreign jet fleet of the post-Soviet Commonwealth of Independent States, including 76% of Russia's 97 foreign-made jets.

"Our documents for buying the Airbuses are in a fairly high state of readiness. The deal will be done in the next few weeks," Okulov told reporters. "Yes, we're signing for 22, and it's a firm contract."

Okulov said the delivery of the planes would begin in 2015 under a financial lease agreement. In the meantime, the firm would use Airbus A330s under an operating lease. They will be delivered in the fourth quarter of 2008.

Okulov did not give a value for the deal or any details on the specific models being purchased.

The deal would be worth $4.4 billion at list prices although airlines get discounts for bulk orders.

A comment from Airbus was not immediately available.

Shares in EADS were up 2.33% at 21.96 euros in Paris at mid-day.

EADS is also poised to become the primary foreign partner in the newly created state-controlled aircraft holding firm Russian United Aircraft Corporation, set up to consolidate Russian planemakers into one body, after it bought a 10 percent stake in private combat plane maker Irkut.

Irkut, one of two makers of Sukhoi fighter jets, is expected to provide the core of the Unified Aircraft management team, analysts say.

Boeing has been working on the regional Superjet 100 project with Russian state aerospace company Sukhoi and state titanium giant VSMPO-Avisma.

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