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Last Updated: Wednesday, 20 June 2007, 11:42 GMT 12:42 UK
Russian plane firm challenges West
By Jorn Madslien
Business reporter, BBC News, Paris air show

Russia's arrival as a global manufacturer of passenger planes was a heated and somewhat humorous affair.

Sukhoi Holding Company general director Mikhail Pogosyan and Aliena Aeronautica chief executive officer Giovanni Bertolone
The Russian-Italian partners are eyeing Western markets

Cornered in a tiny room at the Paris air show, in front of a press-scrum so tightly packed they could hardly move, the chief executives of Russia's Sukhoi Aviation and Italy's Aeronautica had a hard time breathing, let alone making the announcement that they have joined forces.

Clearly, the tie-up had been intended to come in an atmosphere marked by victorious bravado and the dignified clinking of glasses.

Instead, the besuited executives were left dripping and even giggling, as a visiting Russian dignitary quipped: "I was planning to speak for an hour, but it's very hot here. I'll be brief."

Tomorrow's world

The announcement, which came after months of discussions, had still caught almost everyone by surprise.

Who could have predicted that at a show dominated by multi-billion dollar deals, the signing of a relatively small $25m (12.5m) contract would attract such a crowd?

Sukhoi plane
Between now and 2024, Sukhoi expects to sell 800 Superjet 100s, including 300 in Russia and 500 on the Western market
Victor Subbotin, Sukhoi Civil Aircraft Company

The answer? Anyone who knows anything about Russia's silent, though increasingly rapid, rise in the global aerospace sphere.

"The display of Russian aerospace technology at the Paris air show has been quite impressive," Sherman Baldwin, Accenture's global head of aerospace and defence told BBC News.

He added that Russia was emerging as a "key supplier to this global market".

And while Sukhoi Aviation's heritage may lie in the world of camouflage-coloured aircraft, it is no newcomer to building commercial aircraft.

Mikhail Pogosyan, the holding company's chief, predicts that the market for commercial aircraft is worth four-and-a-half times as much as the $500bn market for military fighter and transport planes.

New markets

With a view to not only tap into but also expand this market, Sukhoi has develop Russia's first aircraft designed especially to Western standards.

The aircraft has tomorrow's growth markets firmly on the radar: the new 98-seat Superjet 100 is essentially a regional aircraft that has stretched the regional notion.

A woman pours champagne at the announcement
The much-awaited news was celebrated with champagne

In the past, regions were served by short-haul planes with a similar seating capacity but a shorter range.

In contrast, the Superjet 100 is designed to cover 4,500 kilometres, for passengers in the world's fastest growing economies including Russia, hungry for national flight networks similar to those in Western Europe.

Though that is for the future.

In the meantime, Sukhoi is gunning for the lucrative US and European markets, which it hopes will make up some 60% of its sales.

"Between now and 2024, Sukhoi expects to sell 800 Superjet 100s, including 300 in Russia and 500 on the Western market," said Victor Subbotin, president of Sukhoi Civil Aircraft Company, the civil aircraft division of Sukhoi.

First deal

The clever companies in the West are adapting fast to Russia's emergence.

"We are building a new business model, and a new cultural model," grinned Giovanni Bertolone, chief executive of Alenia, a subsidiary of Italian manufacturing firm Finmeccanica.

Alenia has agreed to take a 25% stake plus one share in Sukhoi's civil aircraft division.

"We are very proud that it is an Italian, fast-growing carrier to be the launch company of the Superjet in the Western European market," said Alenia's chief executive Giovanni Bertolone.

(L to R) ItAli airlines chief executive Giuseppe Spadaccini, Sukhoi Holding Company general director Mikhail Pogosyan, Aliena Aeronautica chief executive officer Giovanni Bertolone
Sukhoi says the commercial aircraft market has great potential

Perhaps more importantly sales have taken off, with a first Western order for 10 aircraft announced on Tuesday with Italian budget carrier ItAli.

The deal comes after 61 existing orders from Russian carriers eager to replace aging Tupolev and Yak aircraft.

Looking ahead, the Superjet should rival similar planes made by Bombardier and Embraer, and slightly larger aircraft made by Boeing and Airbus, as it attracts orders from carriers such as Lufthansa, Air France or SAS, the Scandinavian airline.

Cold War tensions

Sukhoi has even been working with Boeing since 2001, which is notable given the way Cold War-style unease has resurfaced - though Boeing's commercial aeroplane chief, Scott Carson, is aware that such issues are less of a concern.

"We often find ourselves confronted with political consequences on both sides," Mr Carson observed wryly in an interview with BBC News.

When asked whether Boeing might be able to influence the political climate, he merely shakes his head.

"No, not really. We just have to live with it."

Inside the Superjet 100 prototype

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