Russia’s UAC looks for efficiency and increased civil sales

By 2035 UAC is going to increase civil production share in its portfolio to not less than 45% By 2035 UAC is going to increase civil production share in its portfolio to not less than 45% (Photo by UAC)

Russia’s United Aircraft Corporation (UAC) plans to change its industrial concept and organizational structure as well as increase the share of commercial products in its total output, says the company’s new development strategy until 2035 announced last week. This document has been presented soon after Russia’s Ministry of Industry and Trade published the strategy for development of the country’s aviation industry until 2030 which also describes the existing industrial concept of the whole industry as ineffective.

As part of its concept renewal UAC plans to create specialization centers in the near future as well as production and development centers of competence. The corporation wants to decrease the number of final assembly plants (some of them are to be repurposed) and scale down production facilities area. Part of the discharged works are planned to be sold or leased. Another aim of new industrial concept is outsourcing non-key operations and organization of supplier management system. UAC estimates the financial effect from all these actions scheduled in 2016-2035 to be more than 700 billion rubles (about $11.3 billion).

UAC structural change assumes turning the holding into an integrated company which should enhance business controllability. It is planned to implement unified standards, establish subdivisions on major business directions and introduce a program-based management system.

Civil production share in UAC portfolio by 2025 should grow not less than to 40%, and not less than to 45% by 2035. The company’s share on the commercial aircraft market should grow from current 1% to 4.5%. Now the civil products amount less than 20% of UAC portfolio. As part of its civil segment expansion the corporation will have to balance its revenue volumes, build up sales system and improve aftersales support.

As a result of the new strategy implementation by 2035 the corporation plans to create “a profitable business which is attractive to investors” and decrease its state financial support dependence. UAC civil products will include Ilyushin Il-114-300 turboprop, Sukhoi Superjet 100 (SSJ 100) regional jet with its long range and VIP modifications, МС-21-200/300 narrow body airliner and future Russian-Chinese wide-body aircraft.

The Ministry of Industry and Trade’s revamped strategy which was published in November this year stated lack of efficiency and subsidy-dependence of Russian aviation industry as well as its almost 100% orientation on the local market. Aftersales support system is also criticized. It is also noted that the previous development strategy until 2015 had been implemented only partially also due to diluting resources on too many projects and lack of experience in the international cooperation.

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