Dispute between Sukhoi and Armavia Keeps Superjets Grounded

 - October 1, 2012, 3:55 AM
Armavia’s first Sukhoi SSJ100 accumulated 1,800 hours in revenue service before its last visit to Zhukovsky for maintenance.

Armavia’s first Superjet SSJ100 sat idle at Sukhoi Civil Aircraft’s maintenance and training center at the Ramenskoye Aerodrome in Zhukovsky near Moscow last month, as the manufacturer and the Armenian flag carrier remained locked in a financial dispute. A second SSJ100 originally scheduled for delivery to Armavia in June also remained in Zhukovsky, leaving Sukhoi Civil Aircraft (SCAC) in the unwelcome position of storage facilitator while it urged the airline to settle arrangements to resume operation of at least the original airplane.

An SCAC spokesman told AIN that the manufacturer hoped to resolve the dispute over the first airplane (S/N 95007, registration EK-95015) by the end of last month. “There is little doubt that Armavia will resume operating the Superjet,” the spokesman asserted. However, he couldn’t issue any assurances that the airline would ever take the second (S/N 95021, EK-95016).

Armavia accepted delivery of EK-95015 on April 19 last year and performed its first revenue flight on April 25. The airplane flew on Armavia’s network of routes to 34 airports until early this summer, when it flew to Zhukovsky for maintenance and work involving reinforcement of certain load-bearing structures. At the time the airplane had logged nearly 1,800 flight hours.

According to Armavia officials quoted in the Russian press, the dispute stems from the airline’s displeasure with the airplane’s reliability and SCAC’s insistence that the airline pay for repairs still under warranty. Meanwhile, SCAC insists that Armavia’s reluctance to continue operating the SSJ100 stems from financial, rather than technical, issues.

Second Aircraft in Doubt

At July’s Farnborough International airshow SCAC sales director Igor Syrtsov told the media that Armavia refused to accept its second SSJ100 from Sukhoi because the carrier didn’t like the financial package structured by VEB, one of Russia’s key banks and the primary one appointed by the Kremlin to support Superjet sales. In subsequent weeks SCAC asked VEB to revise its earlier terms and tried to arrange alternative financial packages for Armavia. Although VEB calls Armavia’s financial situation “far from ideal,” the bank appears ready to grant the airline a new eight-year-term credit line worth $40 million, enough to allow it to resume flying with the first airplane and begin operations with the second. Meanwhile, Armavia told the press that during the Farnborough show it had entered negotiations with Airbus and Boeing over narrowbody acquisitions, hinting that Western aircraft could replace its SSJ100s. At the time Syrtsov said that he failed to reach terms with Armavia, “I will place this airplane with another airline by the end of the summer,” he pledged. He did not deliver on the promise, however.

According to Russian media reports, Armavia used EK-95015 as collateral to secure loans from Armenia’s Ardshininvestbank for its fleet renewal programs, thus preventing SCAC from placing the airplane with other operators.

In late August both SCAC and VEB threatened to take Armavia to court should it “continue to refuse [to attempt to settle] the dispute in a cooperative manner.” Each says the airline owes it money, in the case of SCAC for spares and maintenance work, and to VEB for arranging financial packages.

SCAC vice president of finance Eugeny Konkov reportedly said that EK-95015 remains at Ramenskoye Aerodrome not because Armavia refuses to take it back after repairs, but because the airline did not pay for the maintenance done on the airplane. Konkov declined to specify the debt, but called it “substantial in view of the carrier’s [known] financial situation.” Later, sources within SCAC estimated Armavia’s debts to exceed $4 million.

Word of the dispute reached top levels of the Russian government, prompting Russian prime minister Dmitry Medvedev to speak publicly on the issue. In his short statement to the press, he said he instructed the Ministry for Industry and Trade, the Ministry for Foreign Affairs and SCAC parent company United Aircraft to “amend the situation” by September 15.

As of early September, Aeroflot operated nine SSJ100s. Since revenue flights began in June 2011, its fleet has accumulated more than 12,000 flight hours during 6,200 revenue flights to 27 airports.

Meanwhile, Russia’s Central Aero Hydro Dynamics Institute (TsAGI) issued a statement in early September about completion of additional tests on the landing gear of deliverable SSJ100s, and declared it satisfactory. The very fact it conducted further testing after Russian type certification in January 2011 and EASA CS-25 certification in February 2012 raised still unanswered questions, as neither SCAC nor TsAGI gave a reason for conducting the tests.