"UAC from the "confederation" should become a single company"
UAC CEO Yuri Slyusar on how the company's management is changing and who will order Superjet100 New
In next yearThe United Aircraft Corporation (UAC) is to deliver the first MS-21 medium-haul airliners to Rossiya Airlines. Certification of the aircraft is due to be completed in December. UAC has completed 680 test flights out of 800, UAC CEO Yuri Slyusar said in an interview with Vedomosti.
He emphasizes that the 220 billion rubles spent on the creation of the MS-21 and subsequent investments can be considered investments in the development program of the aviation industry as a whole. The Corporation is counting on massive state support for the production and promotion of Russian aircraft, including in foreign markets. Last year's model-state guarantees for the supply of 59 Superjet aircraft for Red Wings, Rossiya and Azimut-laid the foundations for such support, but we are talking about expanding it, in particular at the expense of the National Welfare Fund (NWF), the mechanisms are being finalized, says Slyusar.
UAC, which became part of Rostec in 2019, then began to transform the corporation's management. Slyusar explains what has been done and what needs to be done so that UAC "turns from a" confederation " into a single company."
– Next year, the first deliveries of the MS-21 are expected. What will be its real cost for first-time buyers?
– The real cost, of course, we can not name, none of the world's manufacturers ever do this. This is always a matter of negotiation. It depends on many factors, including the appearance of the aircraft, the amount of advance payments, etc. We are well aware that the cost should be comparable to the price of competitors. Airlines are unlikely to be willing to buy equipment more expensive, pay a lease payment that differs from a similar payment for a foreign-made aircraft.
"And the catalog price?"
- Catalog – about $97 million. Catalog prices are comparable to the Airbus 320 and Boeing 737 families.
– How many flights do you need to perform on the MS-21 to get certified by the Federal Air Transport Agency?
– The number of flights is determined by the program of ground and flight certification tests agreed with the Federal Air Transport Agency. According to preliminary estimates, about 800 flights were required for certification of the aircraft. This number can change both up and down depending on the ability to work out several modes in one flight. Currently, the aircraft make about 40 flights a month. More than 680 flights have already been completed.
– And all four MC-21 prototypes participate in these flights? They also have structural differences.
-Four MC-21 – 300 prototype aircraft are participating in certification flight tests, two more aircraft-resource and static, in addition, another prototype aircraft with a PD-14 engine.
The certification program is extensive, and the machines are specialized. Accordingly, aircraft may differ in terms of test equipment, and even in terms of design. For example, initially the first aircraft were equipped with an emergency escape system and a tail support. But I would like to emphasize once again: all aircraft take part in the certification program. A significant part of the tests has already been passed.
– How much money has been invested in the creation of the MS-21?
– It's not just building an airplane. This is a whole program for the development of the aviation industry, the creation of a number of new technological solutions, composite production, and the modernization of a number of cooperative enterprises under the MS-21 program. To date, investments have amounted to about 220 billion rubles, and this is not the final figure. Of these funds, R & D accounts for the largest share – more than 170 billion, while the remaining funds are primarily technical re – equipment. In addition, we invest in an after-sales service system.
Most of the investment in the project consists of budget funds, about 150 billion rubles, more than 50 billion rubles – own and borrowed funds, the remaining part – investments of Rostec.
"Program 59 has proven itself well"
– After a meeting with the president at the MAKS air show in July, Industry Minister Denis Manturov said that the president supported last year's decisions to promote 59 "Superjets" – state guarantees for 140 billion rubles – to the market "as a basis" for ensuring the supply of our civil aircraft and helicopters in the future. What was meant by that?
– Let me remind you that the decision on 59 aircraft, which was made in May 2020, made it possible not to stop the production of the Superjet during the difficult period of the pandemic.
The President supported us then. Production of "Superjets" continues, the enterprise in Komsomolsk-on-Amur is working. The aircraft proved to be even more in demand during the pandemic, as Russian airlines opened several dozen new routes based on Superjets, and in just a few years – about 200 routes. The car has become the mainstay of the regional transportation fleet, flying up to 8-9 hours a day. From the point of view of transport accessibility, development of regional transportation, preservation of skilled jobs and increasing the pace of aircraft production, state support has proved to be justified.
The idea of the meeting is what the Minister said: to preserve the best of the approach applied to 59 aircraft. But to form a comprehensive support system, taking into account the use of NWF funds, partnership with leasing companies, the Ministry of Industry and Trade and the Ministry of Transport. "Program 59" for a year and a half has proven itself well and needs to scale, extend and expand the range of aircraft.
– So there are state guarantees for the supply of all Russian-made aviation equipment?
- The mechanisms are still being finalized. We are talking about a set of state support measures. Most likely, we can talk about subsidizing the interest rate of bank loans, state guarantees, and funds of the National Welfare Fund.
All experts are well aware that with the first MC-21 aircraft that have just rolled off the assembly line, it will be very difficult for us to independently, without state support, provide airlines with the same operating economy as for the Boeing 737, of which 10,000 were produced, or for the Airbus 320, of which a comparable number were built.
Hundreds of foreign passenger planes that fly in our country are put on the market according to a well-developed financial scheme, where serious resources of Western banks are involved. The low cost of credit resources – 2-3%, the long nature of the money used in leasing schemes make it possible to keep a moderate rate for equipment operators. The effective life of the aircraft is 25-30 years, leasing contracts are concluded for 10-15 years. Compared to our competitors ' foreign aircraft, such a financial model exists based on foreign financial institutions.
To be successful in the market, we just need to create an equally effective financial platform. Each percentage in the loan rate is an additional millions of rubles in the airline's lease payment. In this context, NWF funds, long money at a low interest rate, are the most important factor for the sustainable development of the industry.
Investment in the aircraft industry is a systematic investment in the development of the country's industrial infrastructure as a whole. Otherwise, the governments of the United States, Europe, and China would not be doing this.
– The president's instructions following the summer meeting at MAKS set out the amount of state support for the aviation industry until 2024: allocate 318 billion rubles from the budget, including 80 billion rubles in the form of a property contribution to Rostec for subsequent transfer to the UAC; allocate up to 238 billion rubles more to subsidize the issue of bonds or a loan from Rostec. The National Welfare Fund was instructed to allocate up to 279 billion rubles for the supply of aircraft. Are these already approved figures?
– We have submitted our proposals and are awaiting approval.
– Last year, UAC was recapitalized from the budget by 250 billion rubles, thanks to which it was possible to write off the corporation's old debts. What is the current amount of your debt?
– Our total loan portfolio was about 600 billion rubles. After the restructuring and repayment of part of the debt at the expense of state support and own funds in early 2021, the level was 320 billion rubles, today the portfolio of commercial loans is about 300 billion rubles. At the same time, about half is restructured debt. In addition, taking into account the implementation of the scheme of advanced deliveries of equipment in the interests of the Ministry of Defense, we received an additional 40 billion rubles. These are subsidized loans.
– What are these loans from which banks?
- In many leading banks, including our corporate bankNovikombank. Now the portfolio is balanced.
– Why do you have to take loans for new projects?
– The main source of revenue for us is still the state defense order (SDO). By the way, the most important decision was made during the pandemic, our colleagues from the Ministry of Defense supported us, and we started implementing a scheme for advanced deliveries of equipment. This gave an additional load during a difficult period. The state budget means stability of work, guaranteed employment, loading of enterprises, serial production, but low marginality. We deliver GOZs, usually with a small margin, which is not enough to finance promising programs. And we have them, with rare exceptions, all are in the investment phase. Therefore, attracting credit resources remains a relevant tool for financing developments.
"The element of pressure on commercial operators is inappropriate"
– When will it be possible to reach the economic payback of the MS-21 project? That is, to start operating these aircraft without such massive support?
– For us, the watershed for the MC-21 is the achievement of the serial production that is now indicative, i.e. 72 aircraft per year.
– Is it for 2028-2029?
– According to the current plans-2027. Next year, four aircraft should be produced in Irkutsk, then 12, then 24, 36 and then up to 72 units per year. At the same time, taking into account our experience, we are already deploying a single after-sales service platform for the entire line of civil aircraft.
As the number of aircraft in operation reaches high serial production, it will be dozens of aircraft already. Accordingly, there will be a growing interest in aircraft after-sales service as a business not only on the part of developers and manufacturers, but also on the part of private companies. From the point of view of investments in after-sales service, creation of warehouses, competence in repair of components, training. As we see it now on the "Superjet", which is already in operation one and a half hundred.
– By private companies, do you mean Novaport, which wants to create Superjet maintenance bases for Red Wings, and, probably, Sheremetyevo, with which you signed a sublease agreement on July 21 for a complex for aircraft maintenance?
- Yes, different players. For example, we signed an agreement with Sheremetyevo at MAKS. It involves the construction of a hangar and a maintenance center. Today, S7-Technics, A-Technics, and Tulpar Technician also have a certificate for SSJ100 maintenance and repair. Vitaly Vantsev Group of Companies (co-owner of Azimut, which operates SSJ100, and Vnukovo Airport. – «Vedomosti") shows interest in creating a center on the basis of Vnukovo, where there will be a warehouse, repair of components, and maintenance.
– Can you name the implementation dates for the Vnukovo project?
– I would not dare to give exact figures and dates without my partners. But we are discussing the creation of such a competence in detail. We are very attracted to the repair of components, so as not to send them abroad. This gives three obvious advantages: saving time, reducing costs and minimizing sanctions risks, and reducing sensitivity to any exacerbations.
– UAC should certify the import-substituted version of the SSJ100 before the end of 2023. When can deliveries begin? Maybe you already have substantive negotiations with customers?
– Everything is quite transparent with commercial companies. They need a competitive aircraft with a competitive economy. Reliable, serviceable, and safe. The operation of which brings money.
Our task is to make sure that the program for equipping the updated SSJ platform is not just a replacement of foreign pin-to-pin equipment with similar Russian copies, but that it is a new generation of equipment with new functions that give new opportunities to the aircraft. We set this ambition as a target in cooperation with our partners and system suppliers, primarily from the Rostec contour. Everyone is well aware that choosing Russian history requires serious investment. The element of pressure on commercial operators is inappropriate.
There are other customers who are sensitive primarily to the issue of the country of production - these are federal authorities that prefer to operate 100% domestic equipment, companies with state participation. This is also an important part of the potential demand for this machine.
– To what extent do you still count on commercial customers here? Do you have a guideline on how much they will account for?
– We certainly count on commercial customers, as I have already noted. It is too early to say about the specific share. Much will depend on the structure of demand in the market at the time of the release of the car.
– During the air show in Moscow, the manufacturer met with potential operators on the topic of import-substituted Superjet. What was discussed there?
– We consider it important to properly build interaction with potential customers from the earliest stages when implementing this project. This allows us to take into account additional nuances and new needs of airlines already at the stage of creating the aircraft, so that the output is exactly the product that will be in demand by the market. Just during the air show, we held one of the first such meetings. We plan to continue this practice.
The terms of the project remain the same. 2024 is the year when deliveries of this aircraft begin. The key element is the new PD-8 engine. Colleagues from UEC (United Engine Corporation. - Vedomosti) they are working on it, the engine is being created. The work is carried out in close cooperation with the Rostec aviation cluster companies. We have signed contracts with domestic developers, manufacturers of equipment, systems and aggregates, and all of them are being implemented.
– At one stage of the project, the creation of an ultra-dense version of the Superjet100 (for 115, 120, 125, 130 and 140 seats in a single-class layout) was discussed. Is it now decided to develop this version?
– No, the primary task is to create a version of the Superjet equipped with Russian systems and units of the new generation in the current passenger capacity. It makes sense to discuss the feasibility and possibilities of developing the family and creating various versions with increased passenger capacity in the context of the entire line of civil aircraft, including the MC-21 line with its possible expansion into both the upper and lower segments.
The corporate transformation that is taking place in the UAC civil aviation unit is aimed at creating not just a single structure to save administrative and managerial costs, but also at creating a structure that would manage the creation and development of a single line of civil aircraft. Individual manufacturers that were different legal entities at the time of creation will be located within a single company, with a single management. This work is already underway.
– A single line under a single brand?
- Yes.
– The domestic operator, apparently, does not care so much whether there will be one brand or several? This is more of a marketing story for promotion abroad. Does the plan with a single brand mean that UAC expects serious exports of civil aircraft in the future? With the "Superjet" did not work out.
- Marketing principles are identical both in our country and abroad. There is no special background here. As for the external market as a whole, we have never removed the export direction from the agenda. Recently, the global market has been living in a pandemic situation, so the history of external active positioning in general has slowed down somewhat in all countries of the world for most manufacturers. However, this track is gradually coming to life. In the future, we see export opportunities.
We take into account all the nuances of the difficult experience of Superjet's initial entry into the foreign market, including the working conditions of those operating partners with whom we dealt. Therefore, the logic of the development of the civil line involves two stages. At the first stage, a fairly serious domestic market is considered as a driver of program development. At the next stage, well-established schemes of financial and leasing support, product improvement, and after-sales service are expanding to the international level. We are also developing a unified after-sales service system for civilian products in this logic.
"We are building on a product strategy"
– In March, it was announced that the Sukhoi and MiG legal entities would be liquidated and a single corporate center for aircraft construction would be created. Why is this done? What will UAC look like in the future?
– There are several clear tasks in the framework of the transformation program approved by Rostec. First: UAC from the "confederation" should become a single company. The second is why this is done. In order to increase business efficiency, make the administrative and management unit more compact, reduce costs, and at the same time increase manageability. The third. What logic is being laid. We build on our product strategy. The internal structure of the combined company will include four product areas-civil, operational-tactical (military), transport, strategic and special. Asset consolidation follows these four tracks. On the basis of the UAC, combined with Sukhoi and MIG-that is, with a division of military aviation-a general corporate center of the entire corporation will be formed. At the same time, the design bureaus will remain, continue to work and develop as separate structural divisions of the combined structure.
We have some examples. A strategic aviation division was created on the basis of Tupolev in 2015-2016. We have combined both the design bureau and the plant into a single structure with vertical management. As a result, all operational issues remain in the internal loop and are promptly resolved, while transaction and bureaucratic costs are eliminated. Work has benefited from this. A civil aviation division was formed a year and a half ago, and the formation of a military aviation division based on Sukhoi and MiG is currently in an active phase. In parallel, the process of integrating transport aviation assets based on Ilyushin is underway, and legal registration should be completed in November this year.
– What will happen to the civilian division?
– As I have already said, SCAC (former company "Sukhoi Civil Aircraft", now a branch of "Irkut ""Regional aircraft". - "Vedomosti"), which developed the "Superjet", and " Irkut "(developed the MS-21. - "Vedomosti"), " UAC-integration center "(competence center for the integration of avionics. - Vedomosti), Aerocomposite (center of competence for creating composite structures, including the MS-21 wing – - Vedomosti) were merged into the civil aviation division based on Irkut a year and a half ago. Now there is a process of unification and standardization of activities within the merged company, combining and optimizing duplicate functions. Taking into account the different stages of the life cycle of the MS-21 and SSJ, while leaving two civilian design bureaus. But in the future, of course, the engineering center, which will be engaged in the development of the entire line of civil aircraft, will also be a single structure.
– This is approximately in what years?
– Now we combine everything that is not related to the design/testing process within the newly formed divisions. For example, you don't need to have a financial service, a legal service, a corporate service, or a purchasing service in several locations. It's too early to talk about design bureaus, because these are creative teams, creative people, and unique connections. We are extremely careful in our approach to the transformation of design departments in the group as a whole. At the same time, we consider it important to gradually develop a common infrastructure for different design bureaus at a new technical level. For example, a high-performance computing center or a common bench base. But we don't touch the design bureaus themselves. I would like to reassure you that there has been a lot of speculative talk about this recently. The main task is to increase the efficiency and efficiency of work, to create conditions for development, including infrastructure.
– How much will the UAC staff be reduced as a result of the transformation?
- The number of employees decreased from 91,000 in 2019 to 87,000 in 2020. And up to 83,000 should be reduced this year.
"At whose expense?"
- First of all, administrative and managerial personnel and support functions. We try to take things related to service functions, such as cleaning, catering, maintenance of power facilities, provision of vehicles, repair of equipment and structures, outside the corporation's contour.
At the same time, we keep the main production workers, and in some places we even recruit them, because the workload of enterprises is growing, and the production of new aircraft is developing. Retaining and attracting highly qualified personnel is one of our key tasks. We follow trends in the labor market in Russia and globally in general.
– The United Aircraft Design Center of the UAC, which Rostec reported about in the spring – - what is it?
– This is an infrastructure project aimed at improving the working conditions of designers and engineers of our design bureaus. We want to build a modern office building for them, in which they would be comfortable and convenient to work. With the necessary equipment, with a unified information system, with the infrastructure that I mentioned, which will be created in the interests of all design bureaus. This is not a combination of design bureaus as a process of merging organizational structures, but creating conditions for their creative and comfortable work in one place. We chose a historical place on Leningradka, on the territory of the Sukhoi Design Bureau. Through the fence-KB Mikoyan, not far across the road – "Ilyushin". This territory makes it quite possible to locate designers working in our Moscow design bureaus. We already have proposals on the concept of the complex and its approach. In addition to the working space for designers, it is planned to place stands, all the necessary infrastructure, social facilities (fitness, recreation area, etc.) – up to the aviation Museum.
– This is a major investment project.
– Yes, it is. In fact, we plan to use the sale of some of the assets that are being released to raise money and use it to create this new center.
– When will construction start and how much will the project still cost?
– We are at the preliminary stage, we are working on design issues. While at the concept stage, but we plan to start this year, go to the active phase. In total, the project should take a maximum of 3-4 years. Examples for us are both Rostec City and, for example, the Yandex headquarters. We have someone to look up to.
We are talking about a modern, high-rise, glass, equipped, beautiful, comfortable building.
It's too early to say about the cost. We are currently making calculations. But this is about 200,000 square meters. m – you can estimate the cost.
– What other projects are planned in line with the transformation of the UAC?
– The key direction is corporate transformation, forming the outline of a single two-level company, when there is a common corporate management center and separate enterprises in the form of branches-design bureaus, production facilities, and competence centers. Modeled on other Rostec holdings. In addition, it is the development of the production system, a more efficient model of cooperation between the group's enterprises, and the active implementation of business digitalization projects. In the context of building a more compact management model and optimizing support functions, we are creating several corporate-wide service centers. This applies to the IT sector, financial services, and a number of other areas.
In addition to these pressing tasks, we try to look a little wider. For example, there is an idea to improve the territories of factories. A lot of money has been invested in the technical re-equipment of the sites, but, as usual, it is not very common for us to pay attention to the external side. And I want people to feel comfortable at the factory, to understand that they are in a well-maintained environment that meets all the most modern, including aesthetic, requirements. In addition to the fact that the plant creates modern aviation complexes and high-performance equipment, it should also look like a place where innovations are created from the outside. This is especially important for young people. Especially in cities like Komsomolsk, this is very important. On the example of Komsomolsk, we are making such a pilot project of landscaping. Then we'll see if we can extend this practice to other factories.
"There is a lot of interest in Checkmate"
- Deputy Prime Minister Yuri Borisov said that the crash in August of the only prototype of the military transport Il-112B will slow down the entry into the market of regional Il-114-300s (with the same TV7-117ST engine). Experts estimated that they will appear on the market not in 2023, but in 2024. Do you think this is a realistic time frame?
– A commission is working to investigate the incident. When we get the results, we will understand the future schedule for implementing the program and the necessary actions to minimize risks. The second prototype Il-114-300 is currently being assembled in Lukhovitsy. There are two Il-112 prototypes in production in Voronezh. We do not stop manufacturing airframes.
– The UAC developed the Checkmate fighter presented at MAX on its own initiative, right?
– Yes, the fighter concept was proactively proposed a year ago. Then the president supported it. We were instructed to speed up, and we did. Therefore, in a year, thanks to digital design methods and the use of supercomputer technologies, we managed to create a new aircraft. Documentation was developed, units were manufactured, and assembly was carried out. The plane that we showed at the air show is not just a demonstrator or prototype, it is a real sample. We hope to launch our first flight in 2023.
– Have foreign customers already managed to evaluate the aircraft?
– Judging by the visits of delegations to the pavilion [on MAKS], the interest is very high. And, of course, we will now carry this plane to exhibitions, if they return to the usual offline mode. We believe that this aircraft – for us at least-is a revolution in design, in customer relations, and in the organization of after-sales services.
– Will the Ministry of Defense order it?
– This aircraft as a platform implies both a two-seat, and optionally manned, and unmanned versions. We hope that our key customer will be interested in this approach and modification options.
– Do you plan to use the engine of the second stage – "product 30" – for this aircraft in the future?
- Over time. Aircraft and engines often live in different life cycles. Sometimes the same engines are put on several aircraft. Sometimes several engines are put on one plane. This is a natural process. But, of course, we will consider the engine of the second stage for this aircraft, too, not only for the Su-57.
– The Ministry of Industry and Trade did not participate in financing the development of this aircraft?
– This is an initiative development, but we hope for the help of the Ministry of Industry and Trade. Of course, we need government support in creating this product and this platform.
– How much money may be required to start production?
– There is already a figure, but we are not sure that we can name it. Let's just say: it is quite reasonable. We use in the new car the existing advanced reserve created in the framework of various other design developments, not only the Su-57. Therefore, there are no mega-expenditures for testing here.
https://www.vedomosti.ru/business/characters/2021/10/18/891601-oak-konfederatsii
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