«I don’t see a single serious difficulty caused by the sanctions»

30 January 2018
Head of Ilyushin company Alexey Rogozin on the state and development of the transport aviation

Рогозин А.Д. Фото Глеб Щелкунов  Коммерсантъ.jpg

In 2017, on the basis of Ilyushin Aviation Complex, the transport division of the United Aircraft Corporation (UAC) was founded. Alexey Rogozin became the head of the division. In an interview to Kommersant correspondents Ivan Safronov and Alexandra Djordjevic, he spoke about how he had found himself in the aviation after the defence ministry entities, about the problems he had to face and the measures to be taken to reduce the number of those problems. He also answered the question whether there is any cooperation between Ukraine and Russia and admitted: even the sanctions can be profitable.

— Aleksin chemical plant, ministry of defence, and now Ilyushin Aviation Complex – these fields seem to be a little different...
— Almost all my life I have been, one way of another, associated with production, that is why the invitation to become the head of Ilyushin and the UAC vice-president was an honour for me. Among the enterprises which I supervised in the defence ministry, were aircraft repair plants, 224th flight detachment, and Oboronlogisktika company. Over the last years, I cooperated with the UAC on a regular basis. Besides, my grandfather, aviation lieutenant-general Oleg Konstantinovich Rogozin, was the representative of the defence ministry during IL-86 aircraft designing. Many of Ilyushin veterans still remember him and speak about him. It is a great responsibility for me.

— What will you remember your first year at IL for?
— It was a very difficult time for all of us. First, IL itself became not just a design bureau, but also a managing company with regard to the whole UAC transport division. Basically, we were charged with management of a whole sub-industry, which deals with production of both transport and passenger aircraft. The main thing now is that at once several new projects are being actively developed in the design bureau. They include IL-76 programme development, manufacture of a new IL-112V light military and transport aircraft, IL-276 medium military and transport aircraft, modernisation of AN-123, as well as two passenger aircraft – regional IL-114, which will also have a modification in the form of a platform for special-purpose aircraft, and IL-96-400M, which, I hope, will be actively used as a wide-body liner, in particular abroad. At the moment, the transport division is the busiest in terms of developments.

Will you manage to ensure production to full capacity in the near future?
— Unlike the other divisions, we don’t actually have a single aircraft in batch production. For a factory, to make two or three aircraft per year is, of course, not the workload we would like to have and feel comfortable about it, and it is not the productivity which pays for itself. That is why, on the one hand, we are very busy, and on the other hand, we understand that, as a division, we are still unprofitable and actually remain at the stage of investment. Entrance of new projects to the market will allow to drastically change the financial and economic situation. Production cycles of complicated aeronautical equipment usually take years, and there is no way the situation can be improved quickly. Factories are still often financed with borrowed funds, which increases the debt burden. Nevertheless, the important event which took place the other day – the first flight of IL-78M-90A – is the beginning of renewal of the aircraft park in service. Such events prove that we can be effective. Today, the UAC is at the stage of significant reform. One can mention the UAC plans to form a unified company. But I believe that the most important thing is that recently we have managed to see the situation we are in without any bias, we have acknowledged the problems and realized that we are capable of solving them.

— What is the condition of the main assets which you are supervising? We are interested specifically in the condition of the Voronezh Aircraft Manufacture Joint Stock Company (VASO) and Aviastar-SP.
— Both the factories are in a similar condition, though they differ fr om each other rather greatly. I suppose that the situation with Aviastar is a little bit more neglected, as VASO has never ceased to produce planes, including AN-148, while Aviastar, for a number of reasons, found itself in a situation wh ere it made certain aggregates, set up production of, for example, fuselage panels for MS-21. But at one point they practically ceased the production of aeronautical equipment. The problem was with the price of IL-76MD-90A. The contract concluded in 2012 was very important, but it affected Aviastar deeply in terms of finance. The aircraft is wonderful, really marketable, it has a large export potential, but, unfortunately, at the time when the contract was concluded, the design documentation had not been developed in full. As a result, whole aggregates were not even estimated and included in the total aircraft cost. Estimated cost-accounting prepared at that time seemed plausible. But, in the last two or three years, at the beginning of the final stage of the aircraft testing, we can say that objectively the price needs to be revised upwards.

— Is it true that Aviastar suffered production losses of one billion roubles for each aircraft?
— We are working with the Ministry of Defence on substantiation of the new price, and we take it very seriously, as no one should have any issues in terms of the reason for the price revision. This work started as early as in 2016, the respective orders have been received. I hope that the process will be finished within the coming months. The new price audit will also be performed by the corresponding departments of the Russian defence ministry and the Federal Antimonopoly Service. At the end, I think, they will confirm the price which reflects the cost price of the aircraft. At the same time, we undertake to further reduce the cost price in order to make it more acceptable for the Russian Ministry of Defence. Anyway, the new price should be considerably lower than the price which the aircraft may have in the market of military and technical cooperation. Currently, we already have a few applications fr om various countries, including those that have not been operators of IL-76 aircraft. But the key mission here is to ensure performance of the concluded contract for the delivery of 39 new aircraft and replace the aircraft of military and transport aviation. We realize how much these aircraft are needed. For example, among other things, they perform regular flights, in the interests of the force grouping in Syria.

— So, it appears that it is necessary either to terminate the contract and renegotiate it on new conditions, or to reduce the number of aircraft?
— As soon as we are able to objectively estimate the cost of the aircraft that are in production today, we will go to the next stage of our discussion with the defence ministry. The new public arms programme stipulates the procurement to take place prior to 2027, but the procurement volume is the customer’s decision.

— At what stage is the development of IL-276 medium military and transport aircraft?
— We practically have the request for proposals concurred with regard to this aircraft; we have specifically formed a very capable team in Ilyushin to work on this project. The aircraft is being manufactured to replace the AN-12 park which is operated by the defence ministry, and the service life of which is expiring. The terms of the project implementation are limited mainly by the need to maintain the number of aircraft in the park. According to our prognosis, the first flight is to take place not later than 2023. With timely financing, I think this is a feasible task.

— Has this task become harder since India withdrew from the MTA project?
— I would not say this is the same project. True, both the aircraft are unified in terms of a number of solutions, including, for example, the dimensions of the cargo compartment – it is almost similar to that of IL-76 – but a lot of other things in these aircraft differ rather significantly. We have performed a thorough analysis of the backlog which had been produced jointly with India as part of the MTA project, but the IL-276 project is being created at the request of the Russian Ministry of Defence. And these tasks are different, operating conditions are a little bit different; besides, we want IL-276 to have a new PD-14 engine. I would not rule out that India may again become interested, taking into account that we have begun development of a quite competitive aircraft. Nonetheless, the main task here is, of course, to replace AN-12 in the Russian Aerospace Forces, and that means that, in the near future, considering the AN-12 aircraft disposal rates, our only customer will be the Ministry of Defence. The AN-12 park will take years to be replaced.

— And what is the service life of the military transport aviation park?
— A large number of aircraft were produced in the interests of the Soviet defence ministry. In this regard, the problem is not as critical as the problem of AN-12 park. Nevertheless, the new IL-76MD-90A significantly differs from its predecessor in flight performance, ease of piloting, cargo capacity. That is why it is not only about the park replacing, it is also about increasing the capacity of the military transport aviation.

— How are things going with IL-112V project?
— In the next half of the year, we plan to perform the first flight of this aircraft, which is being developed to replace AN-26. This aircraft has had a hard fate, as its development in the previous configuration began as early as in 2003 and was suspended twice. Of course, during the work started since the project renewal in 2014, we significantly remade all the documentation and changed the systems. Today we already have two aircraft in production: one static and one flight, the latter being at the final assembly stage, and it is planned to be commercialised in spring. I hope that in spring we will put a few more aircraft into production.

— Is there an order already?
— The supply of IL-112 is included in the new State Armament Programme. At the same time, we are conducting preliminary negotiations on large-scale supply of this aircraft to one of the traditional customers of the Russian equipment abroad.

— It was announced that Uzbekistan was going to cooperate. Does it have the necessary capabilities?
— We have never interrupted our connections with Tashkent, there is an Ilyushin subsidiary there. We are interested in cooperation with everyone who is able to be in cooperation with us, and we see this kind of potential in Uzbekistan in this regard. However, we have certain demands to our partners in terms of their technological readiness and capability of working with digital documentation. There is no doubt that they have the specialists and infrastructure for organisation of a full-fledged production, but so far it is too early to speak about specific projects. Perhaps, our Uzbek partners will become investors.

— How is the issue with the maintenance of AN-124-100 «Ruslan» aircraft being resolved?
— IL is charged with the functions of a developer in terms of these aircraft. This decision was made after the well-known events of 2014, when the Antonov state enterprise practically refused providing maintenance and further cooperation in the AN-124 programme. Now it is IL’s responsibility, and we are discussing modernisation of the aircraft using the backlog, which appeared during the programme of IL-76MD-90A manufacture. I think it is quite feasible to develop the Ruslan project on our own, because the service life of the existing aicraft is still very large, and they can be operated at least until 2040. The main task now is to ensure safe operation and further development.

— Is Aviastar-SP providing maintenance of AN-124-100 in Ulyanovsk without the assistance of Antonov?
— The connections between the enterprises are currently severed. But I would remind you that the aircraft was not produced in Ukraine, but in the Soviet Union. There was a large cooperation of central scientific institutes, design bureaus, enterprises of the whole big country. And the base production itself was organised in Ulyanovsk. So you can’t really consider Ruslan to be a Ukrainian product.

— Is it possible to re-establish cooperation with Ukraine?
— There are already a lot of people in Kiev who understand that the rupture of relations with Russia hit hard at the enterprises of the Ukrainian industry. I can honestly say that we are not avoiding cooperation with Ukrainian partners and we are ready for negotiations. But only if there are respective decisions at the national level.

— You have said that it is possible to operate Ruslan aircraft until 2040. And what about the engines which were produced in Ukraine?
— The service life of the current engines will be enough. And believe me, the Russian industry is capable of establishing manufacture of engines of such type.

— The government has recently allocated 65 billion roubles from the state budget for the manufacture of a new super-power engine which is to be used, among others, by the military transport aviation.
— You have to understand that PD-35 is not a single engine, but a whole family on the basis of one gas generator. The thrust which is used in this family has quite a large range, which allows us to consider installation of a modification of such engine, including the installation on the advanced two-engine configuration of IL-96 aircraft. This issue has been studied. No considerable design changes of the aircraft will be required. PD-35 may also be used on the CR-929 Russian-Chinese wide-body aircraft, or, perhaps, on the two-engine configuration of IL-76 transport aircraft. When developing aeronautical equipment in Russia, one should take plans to manufacture such engines into consideration. Right now are waiting for the enterprises of the United Engine Corporation to present specific solutions on development terms for these engines.

— At what stage is the development of the advanced aviation complex of military transport aviation?
— We are waiting for the decision of the Russian Ministry of Defence on the necessity to perform R&D in the coming years. At the same time, even the basic technical requirements to the aircraft have not been approved yet, but, judging by the current situation, we realize that there are going to be two main qualifying requirements...

— Carrying capacity?
— Yes. As a rule, we talk about a value of not less than 80 tons. And the second requirement is the size of the cargo compartment, allowing transportation of both bulky and oversized equipment. But in order to start the work, we need the customer to understand: no company in the world is capable of developing and manufacturing an aircraft of such class on its initiative.

— Is it going to replace AN-124-100 and AN-22?
— The aircraft’s niche is in this class. Ruslan-type aircraft are highly needed today.

— The manufacture of IL-96-400M rests on payback issues, as four engines require a greater fuel consumption.
— Of course, the engine currently installed on it does not belong to most fuel efficient ones. On the other hand, it meets all the requirements in terms of safety, noise, emission. The elevated fuel consumption, explained by its operation specifics, may be largely counterbalanced by other characteristics of the new IL-96 aircraft. They include a competitive price – that alone must boost the interest of Russian and foreign aviation companies. At the same time, our goal is not just to develop an aircraft and then offer it to the market. We already need to pay heed to the potential customers. Such negotiations are being conducted, and I believe they will result in batch production of the advanced IL-96-400M.

— And what about AN-148 that were produced in VASO?
— The programme is practically completed. However, the aircraft is, without bias, sought-after, that is why decisions may be made regarding the fate of the aircraft of such type.

— Do you have the design documentation for it?
— You are well aware that the aircraft was developed in Antonov design bureau, so, the documentation belongs to them. But at the stage of production development in Voronezh, it was the Russian enterprise which made a significant contribution to the AN-148 modification, that is why this backlog can be used in other future programmes.

— Have the sanctions of the USA and Europe significantly hit the UAC transport division?
— In spite of the difficulties, the sanctions have a positive effect on us, because we, with an active state support, are now charged with setting up our own production of all components, units, aggregates, etc. It once again makes us a self-sufficient aviation power dependent on no one. And the effect that we will have from the import substitution programme is doing us a lot of good. Of course, a lot of issues have to be solved in a super short time, often with elevated expenses involved. But all the issues are being dealt with, we are not stuck in any way. And I don’t see a single serious difficulty caused by the sanctions which would lim it our further development.

— Will the new US sanctions package hamper nothing either?
— It is just a set of certain limitations which we take into account in our work. We have already made an analysis of all possible repercussions. I believe that we should just treat these sanctions as some kind of objective reality, in which we will have to exist for quite a long time.

— How long?
— Decades, I think. Maybe more.

— Are you afraid of finding your own name in the sanctions list?
— Absolutely not.

— For what purpose the transport division is going to receive money from the state programme «Military and Industrial Complex Development Until 2027»?
— The key feature of the new state programme is particular attention to the issues connected with new production technologies, with digital transformation, with implementation of new methods of designing, production organisation, procurement management. The UAC president Yuri Slyusar places particular emphasis on the development issues.

— And what about the after-sales service?
— Our customers are no longer satisfied with just the availability of spare parts in the warehouse. They demand that, at any moment of time, the aircraft should be in contact with the maintenance centre, which would predict a necessity of repair or replacement of individual components. This is an entirely different approach to how aircraft operation and modernisation is going to be ensured in the coming years. Digital transformation is not just buying IT-infrastructure, computers, and so on. It is a change of the very essence of activity and approaches to providing safe and lasting operation of aeronautical equipment.

— Is the military transport aviation stock of orders sufficient?
— We have not finished the development of all the aircraft yet, so, to be honest, we are not actively searching for those customers, giving priority to the Russian Ministry of Defence. Now the stock of orders is sufficient to ensure our workload for the next few years, but as early as since 2019 we will try to start pre-contractual work with regard to the new equipment.

— Are you talking about IL-76MD-90A?
— I am, though IL-78M-90A, which has started the flight tests, will also be in demand, of which I am absolutely convinced.

— Why are you so sure?
— Because it is not just a refueler, but also a convertible aircraft, which, unlike its predecessor, can be used as both transport vehicle and a special-purpose platform. It is a good combination.