An initial batch of five Sukhoi SSJ100 airliners has been shipped to Russia's state-backed Vnesheconombank (VEB) for subsequent delivery to flagcarrier Aeroflot. The deliveries were made during the last week of December and form part of a 100-aircraft order placed by Aeroflot with the Sukhoi Civil Aircraft Corp (SCAC) back in September 2018.
According to SCAC and Russia's ministry of trade and industry, the remaining 95 aircraft will be delivered by the end of 2026. Aeroflot, which already has 49 SSJ100s in its fleet, will operate the new aircraft in a two-class configuration for 12 business and 75 economy passengers.
The Russian government has effectively underwritten the deal through its continued financial support for VEB, which now acts as a so-called state development corporation. Implementation of the the Aeroflot order, “will provide loading for the manufacturing facilities of the Russian aircraft manufacturers and give momentum to development of regional airports… leading to higher mobility of the population," said Denis Manturov, Russia's minister for industry and trade.
Although Aeroflot signed the core deal almost 16 months ago, it appeared unable—or unwilling—to come up with the necessary funds. But at the airline’s supervisory board meeting on October 24, 2019, directors approved the purchase of the first five aircraft.
The Aeroflot board also decided to launch a competition among financiers for the right to structure or fund the deal. At the time, Aeroflot signaled a preference for taking the majority of the additional Superjets on operational lease terms stretching over 12 years. Aeroflot CEO Vitaly Saveliev commented that his company remains the largest operator of Russian-made airliners and that it continues to see its role as supporting local aircraft manufacturers
However, after independent financial groups showed no interest in backing the transaction, the Kremlin instructed the Russia’s largest financial institutions to raise the money under the leadership of VEB. When presiding over the VEB supervisory board on October 30, 2019, Russian Prime minister Dmitry Medvedev instructed the company to acquire the 100 SSJs for the purpose of leasing them to Aeroflot. “This project is, without a doubt, of national importance, as it is intended for further development of the [local] aircraft manufacturing and the network of regional routes," Medvedev explained at the time.
Responding to this call, VEB chairman Igor Shuvalov said his institution is unlikely to fund the entire deal alone. Instead, it may create a pool of investors and also use funds from the Russian state budget. Shuvalov further explained: “Raising funds for the 100 Sukhoi Superjet acquisition for subsequent lease to our flagcarrier, Aeroflot, has been the most important and yet the most difficult [transaction]. The respective project is going to be of a comprehensive nature, requiring both [additional] capital and liquidity for VEB. The funding required is $3.8 billion.”
Reportedly, VEB asked for certain guarantees to be issued by the Russian government or for other forms of state support to be provided, and these now have been secured. In particular, Rostec, the state-backed group that controls Russia's United Aircraft Corp and its SCAC subsidiary, has promised the required funding guarantees for the deal, including residual costs, at the minimal depreciation rate of 40 percent over 12 years in operation. On December 13, VEB announced that it reached an agreement with Sberbank (the savings bank of the Russian Federation) on joint funding for 10 more SSJ100s. This agreement will serve as a template for further similar transactions.