The Russia Journal

The workhorse of the Russian air-cargo fleet for more than 25 years, the Ilyushin Il-76TD, will be replaced by two new freighters, when government officials announce their review of aerospace industry plans March 15.

The new aircraft are the Ilyushin Il-96-400 and the Tupolev Tu-204, according to industry insiders.

Alexander Rubtsov, general director of the Ilyushin Finance Corp. (IFC), the leasing arm of the Ilyushin group, said that he expects the government to provide repayment guarantees and other financial support for building 16 Il-96-400s. The Il-96-300, in passenger configuration, has been flying for several years. The Il-96-400 has a payload of 92 metric tons, and is manufactured by the Voronezh aviation consortium.

Rubtsov told The Russia Journal that financing and leasing deals for the new aircraft are in advanced negotiations with Russian state and commercial banks, and with three foreign banks. The foreign financing, according to Rubtsov, has been offered if Chinese operators implement a reported intention to buy the Il-96. Rubtsov estimated that monthly payments on the initial leasing plan for the new air-freighter should be about $444,000 per month.

"The only real competitor of the Il-96-400 in terms of the cost of transportation of 1 kg of cargo is the Boeing-747-400," Rubtsov said. "But the cost of the Boeing is several times higher than that of the Il-96-400. This plane is able to carry all standard containers for narrow-fuselage planes, and can have automatic loading. It can be loaded with both containers and bulk cargo."

Industry sources have said that, compared with the cargo-carrying cost for transportation on board the Il-96-400, the Boeing 747 is 20 percent higher, and the McDonnell-Douglas DC-10, 40 percent higher.

The government is also expected to authorize state financial support, including loan-repayment guarantees and possibly subsidized-borrowing interest rates, for the Tupolev Tu-204S. This aircraft is built by Aviastar at Ulyanovsk. Its payload is 27 tons.

Stanislav Leychenko, general director of Atlant-Soyuz, Russia's third-ranked cargo carrier (after Aeroflot and East Line), said that his company will lease 10 Il-96-400's and 4 Tu-204S's from IFC.

"In our business plan for the use of the planes that are to be leased, we have indicated calculations for the market that the company already has, not just some projection of the market. We will be introducing Il-96-400 planes gradually, replacing the old Il-76. I'm sure we will be able to occupy prospective markets, because the new planes will enable us to sign longer-term contracts for five to eight years.

"For a company that uses large air cargo planes such as Il-96-400, it is good to also have about a quarter or a third of its fleet in smaller planes, such as the Tu-204S. That is, we have built up a program for leasing of both Il-96-400 and Tu-204S."

The first Il-96-400 that is to be constructed as part of the deal between Atlant-Soyuz and IFC already has its fuselage. An additional six to eight months will be needed to finish the construction.

Rubtsov was confident that, if the government confirms its backing on March 15, "we can look forward to have 50/50 financing by Russian and foreign banks within three years. Of course, an important question is whether the state will be providing subsidies to finance interest rates, which now amount to about 13 percent, while foreign banks, such as the U.S. Export-Import Bank, offer 7-8 percent interest rates to American aerospace firms."

"Russian banks tend to ask for state support that guarantees them 85 percent of their investment. I think that if everything works normally, the share of state support will be decreasing and in four years we can look forward to having 40-60 percent state support. I think that by 2007-2008, state support will be unnecessary."