EADS, Irkut, MiG team on A320 freighter project

 - November 15, 2006, 6:04 AM

EADS has teamed with Russia’s NPK Irkut and RSK MiG in a joint venture to convert Airbus A320 airliners into freighters. The new business–owned 50/50 between the European group and the Russian firms– is expected to generate $200 million in sales annually, based on around 20 A320F conversions. If successful, the partners will later undertake conversions of the larger A330 family.

The A320F project is a part of the offset agreement for Russia through which EADS hopes to finalize an anticipated order from flagcarrier Aeroflot for up to 30 A350s. It includes participation of the Russian manufacturers development and production of the A350, conversion of the A320 freighter and the right to be involved in developing any A320 successor.

“This is not a single-day action, but a long-term project on the order of billions of euros,” Vadim Vlasov, general director of EADS’ Russian subsidiary, told Aviation International News. If the A320F goes forward, it will take another two years to produce the conversion documentation package and build the tooling. These preparations are not due to start until 2009 with a view to executing the first commercial conversion in 2011.

In addition to conversion work, the EADS/Russian joint venture would also undertake D-checks due on A320 series aircraft after 12 years’ service. The A320 D-check work is worth more than $1 million per aircraft.

Sound Business Plan

Irkut president Oleg Demchenko said the proposed joint venture with EADS is a sound business plan. The partners will buy used airliners from airlines, convert them into freighters and sell them to interested carriers. “The agreement with EADS calls for A320F business to be exclusive. No one else except for Dresden [the EADS factory in Germany] and Lukhovitsy [an RSK MiG site south of Moscow] will be doing the work,” he stated. He further claimed that EADS is contractually committed to placing at least 20 conversions with Lukhovitsy, where about 500 staff are to be engaged in the program.

“MiG won the leading role in this project because of our tight cooperation with Irkut,” explained RSK MiG deputy general director Sergei Tsivilyev. “We have perfected the system of logistics and parts acceptance procedure on MiG-29 fighter production. Irkut is already qualified by Airbus [to produce] parts for A320 airliners and will deliver the necessary parts to Lukhovitsy and Dresden.”

Earlier this year, Irkut (Hall 1 Stand E8) won a second contract to manufacture A320 parts, including flap rails, tail structural members, gear stowage bays and floor sections. Combined with a deal made in 2004, this work is worth $340 million and deliveries are to take place over the next 10 years. The first parts, built for Airbus on a trial basis, have already been delivered.

Irkut has sold 10 percent of its stock to EADS (Hall 4 Stand G16) for about $70 million, and is now seeking to acquire a stake in the European group (perhaps with some Russian government financial support). Demchenko, however, denied interest in buying Airbus shares from BAE Systems.