Russian Helicopters Predicts Strong Production Increase Trend Will Continue

 - April 1, 2012, 5:00 AM

Russian Helicopters’ production is on the up and the company is modernizing its factories in anticipation of this trend continuing.

Between 2004 and 2011, the company tripled production, from 85 to 262 helicopters, and last year its revenues from both civil and military rotorcraft grew 40 percent, to RUB120 billion ($4 billion).

Claiming a global market share of 14 percent by aircraft value, Andrei Reus, Russian Helicopters chairman and director general of parent company Oboronprom, ranks Russian Helicopters “third by global sales” behind Sikorsky and Eurocopter.

Kazan Helicopters, one element of Russian Helicopters, had revenues close to RUB30 billion ($1 billion) last year, a five-fold increase over 2007 revenues. In 2011, it invested RUB1.5 billion ($50 million) in a manufacturing facility upgrade. Kazan is using the Toyota production system and has signed five-year contracts with vendors so the holding’s plants can work around the clock.

At Russian Helicopters’ Ulan-Ude plant, which currently builds the Mi-171 and Mi-171Sh, production increased by “more than 35 percent” last year and the factory is in line for an upgrade similar to Kazan’s. It is gearing up to begin producing the Mi-171А2–a “radically overhauled” Mi-8/17 replacement–in two years.

Markets Beyond Russia

The domestic market has proved important. Overall, Russian Helicopters expects to see orders placed by state entities such as the Defense Ministry and the Emercom Ministry of Extraordinary Situations grow by 50 percent this year.

In addition, India has proved an important market for the company, which is delivering Mi-17V-5 medium twins under a contract for 80 aircraft. It is also bidding the Turbomeca-powered Kа-226Т in India’s tender for light helicopters.

Reus noted a growing interest in partnerships with foreign firms. Turbomeca is powering two in-development helicopters, the Kamov Ka-226T and the Ka-62 medium twin. “We are preparing to sign a number of contracts with Italy-based Avio,” Reus added

As for support, Russian Helicopters seems to have embraced a now-common approach. “We launched a new mindset for support two years ago: You should sell not the machines themselves, but their lifecycle,” Reus said. His company is taking “the necessary steps to adopt this type of business model.”

The company provided few details on new programs. “We have begun developing an advanced high-speed helicopter,” Reus said, without indicating whether it is the Kamov Ka-92, the Mil Mi-X1 or another project. The company invested some RUB400 million ($14 million) in the project last year. The time frame is loosely defined as “10 to 15 years” from now. Like the Mi-38 heavy twin, the high-speed project is funded by the Federal Target Program.

Finally, Russian Helicopters is developing centers of excellence in a number of areas, including machining and composite materials. Reus also mentioned “a major transmission project at the Reduktor-PM plant in Perm,” and said that the Progress plant at Arsenyev has launched new casting facilities using “cutting-edge technologies.”

Russian Helicopters is considering a new IPO, following failure of the first attempt last year. “One of the reasons for postponing is that the investors didn’t believe that our order book would remain at the same level as now; but by the end of last year we had signed firm contracts worth $22 billion across Oboronprom,” Reus said. The IPO now awaits “the right time and favorable market conditions.”