Russia’s Accounting Agency Scruntinizes Superjet Finances

 - July 30, 2012, 3:47 PM
Aeroflot has taken delivery of eight Sukhoi SSJ100-95s, all at a cost that has generated losses for the manufacturer.

Russia’s General Account Office (GAO) has completed a study into the Sukhoi Superjet 100 program and found it “under the threat of closing down.” In its report, the GAO says that direct government investment in the project from 2003 to 2010 amounted to 16.9 billion roubles ($513 million). The GAO further notes that the manufacturers, Sukhoi Civil Aircraft Company (SCAC) and engine maker Saturn, spent another 27.1 billion roubles ($822 billion) raised in the free market. The watchdog agency also said the companies spent 800 million roubles ($24 million) on certification. 

The GAO concludes that the Superjet program is in danger: after SCAC won type certification, government support “almost disappeared,” said the office. Furthermore, because SCAC has raised “considerable amounts of commercial funding for R&D, these debts do not allow it to attract more funds [for series production],” said the report. In 2009, said the GAO, SCAC generated losses of 1.3 billion roubles ($39 million), 1.2 billion roubles ($36 million) of which the agency attributed to placement of the first two deliverable airplanes.

Meanwhile, the GAO says that the government had promised a special allocation of 8.4 billion roubles ($255 million) to help Saturn’s main plant in Rybinsk to prepare for production of the airplane’s Powerjet SaM146 engines. Neverthless, Saturn remains underfunded, according to the GAO. Failure of Saturn’s plan to boost annual output to 150 engines by 2014 could seriously harm SSJ100 sales, said the GAO, adding that such a shortfall could precipitate shutdown of the whole Superjet project. Saturn incurred losses of 1.4 billion roubles ($43 million) in 2009 and 1.5 billion roubles ($45 million) in 2010, according to the report.

Commenting on the report, SCAC says it plans to achieve profitability next year, and attributed its debts in 2010-2011 mainly to the contract with Aeroflot, which ordered 30 SSJ100s and placed options for 10 more at prices typically low for a launch customer. The Russian flag carrier has taken eight SSJ100s so far, and plans to take its ninth on August 2. “We are overcoming the debt burden through restructuring of our credit portfolio with help of our shareholders,” the airframe maker further asserts. It points out that last December the supervisory council of Russia’s VEB development bank approved a 12-year credit line for SCAC worth $1 billion, which, SCAC insists, “is indeed a measure to support the [SSJ100] project.”

SCAC plans to produce “at least 23” aircraft this year and 41 next year. The current backlog of firm orders covers 170 aircraft worth $7 billion, as well as options on another 100.