ALERT: Sourced from Russian State-Controlled Media
SVPress.ru – Western lessors demanded the return of more than 500 aircraft by Russian airlines. According to the Minister of Transport of the Russian Federation Vitaly Savelyev, their ransom will cost about 20 billion dollars, however, while Western companies do not want to sell cars, which they openly talk about.
“If you give them 500 aircraft, they will not be able to remarket them, they will not be able to resell, that is, they just take them away, because this is a political decision,” he said.
Now the government is negotiating with the owners and deciding what to do with leasing aircraft. It is not clear whether to continue paying rent or whether a buyout or even nationalization will follow. For example, the Ministry of Transport published a resolution in which it proposed to keep leased aircraft in Russia and pay for them in rubles.
On March 22, Savelyev announced that Russia had already “lost” 78 aircraft due to sanctions. About 800 aircraft were transferred to the Russian registry, in total, at the time of the introduction of restrictions, Russian airlines had 1,367 aircraft.
Naturally, the situation in the aviation industry forces us to look for a possible answer or leverage with which to convince the West to at least let them buy out aircraft from leasing. Most often you can hear a proposal to ban the export of titanium to the United States and the European Union. This metal is in great demand in the aviation industry, and Russia is one of the key players in the global market.
But even such a measure is unlikely to be as effective as we would like. Boeing on March 7, anticipating a possible development of events, suspended purchases of titanium from Russia.
“The company has accumulated significant reserves of titanium, including thanks to Boeing’s initiative to form a pool of suppliers around the world, which has been underway for several years,” the company said, adding that titanium reserves and a supplier network allow us to ensure the uninterrupted production of civil aircraft.
According to The Wall Street Journal, Boeing receives about a third of the required titanium from Russia. The rest of the metal comes from the US, Japan, China, and Kazakhstan. The only titanium producer in Russia is VSMPO-Avisma. The company is the world’s largest producer of titanium, occupying up to a quarter of the global market.
The United States accounted for, according to various estimates, from 25% to 40% of exports. In January 2021, VSMPO-Avisma and Boeing signed a long-term contract for the supply of titanium products, more precisely, titanium forgings, which are needed for aircraft models 787 Dreamliner, 777, 767, and 737. A significant part of the products was processed at the joint venture Ural Boeing Manufacturing (UBM) in the Sverdlovsk region.
Some experts believe that Boeing’s decision is temporary, and in fact, it will be extremely difficult to replace Russian raw materials and blanks. But not only diversification and the formation of large reserves played in favor of the company, but also the decline in production during the pandemic years.
In 2021, Boeing delivered only 340 civilian aircraft to customers, by comparison, the European Airbus had twice as much. And in 2020, the American company delivered only about 150 aircraft to customers. So titanium, taking into account the remaining reserves and alternative suppliers, should be enough for at least a few years.
The situation is worse for Airbus. According to experts, Russian titanium accounts for about 65% of all deliveries. Actually, that is why the company did not refuse them and admitted that it continues to buy metal directly from Russia. The Brazilian Embraer, where the import of titanium from the Russian Federation reaches 100%, depends on Russia the most, but we don’t have any special problems with it yet.
Theoretically, it would be possible to refuse to supply titanium to Europe and the USA. But it is impossible to say that this will completely stop the production of aircraft, although their production will be reduced. As for the cost of titanium in one aircraft, it is far from critical. For example, the list price of the world’s most popular airliners Airbus A320 or Boeing 737 exceeds $100 million per unit. And for 9 months of 2021 (more recent data is not yet available), the proceeds from all deliveries of VSMPO-Avisma to non-CIS countries amounted to $354 million, that is, about three new aircraft. In addition, it should be taken into account that in the event of the termination of all supplies to the EU and the USA, the Russian company will also need to look for alternative markets, and it will be very difficult to attach almost 80% of exports.
According to the experts interviewed by “SP”, given the current development of the aviation industry in our country and in the West, we have almost no chance of inflicting a sensitive blow on our opponents without hurting ourselves. According to the honored pilot of the USSR, the former Deputy Minister of Civil Aviation, Oleg Smirnov, the only way out is to urgently develop our own aircraft industry.
— For Boeing and Airbus, the fact of abandoning Russian titanium alloys is quite painful, because in each aircraft a large number of parts are made of titanium. And, what is very important for the aircraft industry, our titanium is of high quality, it has proven itself in practice, we have well-established deliveries. Our manufacturers without delay provided them to the largest companies.
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But the fact has happened. Boeing has already abandoned our titanium because there is a replacement in the world. And Airbus may well follow that path. What else can we do? Nothing. We got so stuck selling out to Boeing and Airbus in 1991. We can and must do only one thing – to engage in import substitution and move on to a more active return of our country to the status of a great aircraft manufacturing power, which it was before 1991.
Other actions will either be light injections or will completely ruin our relationship with the West. Moreover, I believe that it makes no sense for us to break ties with Western companies, it is simply unreasonable. Still, we will continue to operate Boeing and Airbus for more than a decade. We will be forced to do this for lack of an alternative. How to break relationships with colleagues when we continue to use their products? Those who put forward such proposals, to put it mildly, are not very far-sighted.
We need to “thank” our ministers for this, who, after the collapse of the Union, destroyed the domestic aircraft industry by selling out to Boeing and Airbus. It will be very difficult to catch up with what we have missed in 30 years.
“SP”: – How many years will it take to start mass production of our own aircraft, for example, the Tu-214 at the Kazan Aviation Plant, as Deputy Prime Minister Yuri Borisov recently spoke about?
— The President’s demand for import substitution has not been fulfilled for years. But now there is no time to talk. We have an extraordinary situation – for the first time in a hundred years of civil aviation, the country was deprived of its wings. This is a matter of national security and social importance.
At one time, the president named the types of aircraft that will be produced from our components – these are the MS-21 from large ones, the Il-114, which is already 50 years old, the Baikal, which should replace the An-2, and the Il-96. If we work in the same emergency mode as the sanctions were imposed, we will succeed. If it ends with idle chatter and theft of budget money, there will be the opposite result.
As for the Tu-214, it is a ready-made certified aircraft, practically in no way inferior to Boeing and Airbus. But it needs to be improved. If it stays as it has been for 20 years, it is clear that it will lag more and more behind the global aircraft industry.
Now at the Kazan plant, two Tu-214 aircraft with a high degree of readiness are on staples. These are real projects, you just need to take and finish them. The President of Tatarstan Rustam Minnikhanov, when asked by Borisov when it will be possible to establish serial production of the Tu-214, named 2026. To which Borisov replied that this should be done by 2024.
This requires very serious work, it is necessary to open new factories for components, to look for personnel. Any aircraft has thousands of components made of metal, plastic, duralumin, electronics, electrics, and so on. This is a serious problem, but it must be solved, and it can be solved. But only if intelligent people take care of it, and not “effective managers” who sold our aviation industry to Boeing and Airbus for 30 pieces of silver.
The editor-in-chief of the portal Avia.ru Roman Gusarov also believes that it is not worth burning all the bridges with Western airlines.
– I think that under no circumstances should we follow the path of nationalization of aircraft, it would be a big mistake. We need to stay in the legal field and try to find a way out of the situation. Even in the sanctions regime, things can still change.
As far as titanium supplies are concerned, Boeing has not abandoned them but suspended them based on the fact that they now have stocks, especially since sales have fallen due to the pandemic. Boeing is clearly not happy about this, but the US political leadership is forcing it to do so. On our part, it would be huge foolishness, in defiance of Boeing, to declare that we refuse to supply it with titanium.
– The fact is that today every third Boeing aircraft is assembled from Russian titanium. But in view of the fact that now sales have really fallen, I do not think that the company will soon face a shortage. In addition, he acquires two-thirds of the titanium from other sources. And when he needs more titanium, he will simply invest in other countries and other industries, and establish these chains, in fact, without losing anything.
The Boeing conveyor will not be affected. But we will suffer because we will fall out of cooperation forever. A huge VSMPO-Avisma enterprise will fall out in Verkhnyaya Salda, which is a city-forming enterprise. Our industry will not be able to load it with orders. This is a huge Soviet enterprise and survived mainly due to orders from foreign companies. It is absolutely not profitable for us to break them. We need to take an example from the same Americans who impose sanctions but not against what is beneficial to them. For example, they banned the supply of Russian energy sources, but not uranium, because they need uranium.
We are extremely interested in maintaining this cooperation, especially since Western companies may return after some time. Now they are loudly talking about sanctions, they have been pressured, and they must show solidarity. But I suspect that before the end of May, many of them will return. Therefore, on our part, there is no need to burn all the bridges.
“SP”: – Could we not completely ban deliveries, but, for example, reduce the amount of arrested aircraft?
– Exact data on what percentage of the cost falls on titanium, only Boeing itself has, but we can say that this is clearly not the lion’s share, it’s just metal. We first cast titanium billets, stamp them, make rough mechanical processing, grind them and send them to foreign enterprises, where the final product is precision machined.
Power structures are mainly made of titanium, that is, the frame of the aircraft, that which holds the skin. Even the skin itself is not titanium – it is either duralumin or composite.
There is a large amount of titanium in the frame structures, but its cost is not so high. Any electronic unit can be much more expensive than all the metal in the plane.