Q: Please tell us about new contracts for delivery of aircraft signed by IFC at Le Bourget 2013 airshow.

In the network of the airshow Perm Engine Company and IFC have signed a contract for delivery of PS-90A1 engines for Il-96-400 aircraft.

In addition, a pre-contract agreement with Sukhoi Civil Aircraft Company (SCAC) for delivery of 20 Sukhoi Superjet 100 jets has been signed. The deliveries should start in the fourth quarter of 2015. 15 out of 20 jets will be exported to South-East Asia. The rest five ones will be included in the IFC’s books and then leased. I think that some of them will be exported too.

Q: What else can you tell us about the results of the airshow?

We used the airshow for promoting a wide range of our products, including the ones ordered lately. First of all this refers to MS-21, Bombardier CSeries and Sukhoi Superjet 100 aircraft. We have also promoted our traditional products - An-148 and An-158.

We also held a number of meetings with the airlines in the network of the airshow. We have widely used the mock-ups of MS-21 and CSeries aircraft provided by Irkut Corporation during the meetings. I must admit that these jets have much in common in term of engines, airframe and wing, avionics and interior. This fact appeals to many Russian and foreign airlines. I think that our method based on formation of a new product in the form of a non formalized aircraft family is starting to pay off. People are really paying attention to this and believe that this is a right thing to do. Thus their interest in MS-21 and CSeries aircraft grows.

We have also held a number of important meetings with banks and other financial structures and reached some agreements in the area of financing of our deliveries. This refers to MS-21, C Series, Sukhoi Superjet 100 and An-148/158 jets.

Q: Have you managed to have a look at the latest aircraft demonstrated at the airshow?

I had an opportunity to have a look at Sukhoi Superjet 100. President of United Aircraft Corporation (UAC), Mikhail Aslanovich Pogosyan, invited me and I gladly inspected the aircraft. This jet will be delivered to Interjet (Mexico). I liked the interior made by Pininfarina S.p.A. It was demonstrated for the first time at Paris Air Show; it is the high-quality product. I think that the demonstration of the jet purchased by Mexican carrier and fitted with Italian-produced interior should push up the jet’s sales.

During the show I had to visit An-158 aircraft multiple times. We have demonstrated the jet to the interested partners. The jet was presented by Antonov State Enterprise and it took part in the demonstration flights. Potential customers from Australia (I will not name these airlines now) have also inspected the aircraft. At present these carriers are operating outdated foreign produced aircraft and considering the possibilities for replacing them with the new ones suitable for the carriers’ route network. An-148/158 aircraft may be operated from unpaved runways; this is a very important advantage in the eye of Australian carriers.

Q: What foreign aircraft got you interested?

Honestly speaking I did not see much of the display because I have been constantly negotiating. Most of the time we have been demonstrating An-158 and SSJ 100 jets to the representatives of airlines and financial structures. Unfortunately I had no time to get inside other aircraft.

One of the most important agreements signed at the airshow is the one signed by Russian Technologies and Diamond (Austria) related to the general aviation aircraft. At present we are not working in this segment but we are keeping an eye on it.

Q: We saw you talking to the CEO of Bombardier Inc., Pierre Beaudoin. What was the major topic of your conversation?

We have discussed the implementation of the contract for delivery of CSeries aircraft signed earlier and development of cooperation between Russian and Canadian enterprises. I think that we should have a good progress in several areas (including jets and turboprops) by the opening of MAKS-2013 airshow. I can tell you that our shareholders and representatives of the state have approved the contracts for delivery of 50 MS-21, 32 CSeries and 20 SSJ 100 aircraft. The deals were approved by the Board of Directors of IFC and UAC.

Pierre Beaudoin, CEO Bombardier Inc. and Alexander Rubtsov, CEO of Ilyushin Finance & Co.

In particular, I told Pierre Beaudoin that the contract for delivery of CSeries jets has been approved. The deliveries will be started in the third quarter of 2015. We plan to take delivery of 2 or 3 aircraft in 2015 and then 9 or 10 ones annually during the period from 2016 to 2018. We have a preliminary agreement assuming that the Business Development Bank of Canada will provide 85% of the contract’s value. We are taking out a loan for the period of 12 years under very attractive terms. We plan to use these funds for financing the major part of the contract with Bombardier. The rest 15% will be derived from the company’s own funds and funds provided by investors.

Q: We also saw you talking to Vladislav Felixovich Filev and Natalya Valerievna Fileva...

They always take an active interest in the latest aircraft. They visit every exhibition and talk to the leading manufacturers. They havealso visited our chalet. We have demonstrated our portfolio hoping to kindle the interest of the leaders of S7 Airlines, one of the Russia’s largest carriers. We have showed Sukhoi Superjet 100, CSeries, MS-21 and An-158 aircraft to them. They are studying the market and portfolio of IFC, and they are also considering the proposals of our rivals. Many companies are dreaming of S7 Airlines becoming their customer. Vladislav Felixovich and Natalya Valeievna are keeping an eye on the latest aircraft demonstrated at international airshows. They are interested in purchasing new efficient vehicles. We hope that they will cooperate with us in future.

Q: How is your partnership with Transaero developing?

Transaero is preparing for operation of cargo version of Tu-204. We have already delivered two such jets to the carrier. One liner is already performing flights and the second one will perform its first revenue flight in July. The results of first flights are positive.After taking delivery of Tu-204C Transaero, known as regular and charter passenger carrier, entered the new segment - air-freight operations.

Q: What can you say about the operation of An-158 by Cubana de Aviacion?

The first jet was delivered to the customer in March, the second one should be delivered by July 25th and the third one – in September. An-158 is already operated on domestic routes by Cubana de Aviacion: the jet performs flights from Havana to Santiago de Cuba and Guantanamo. Cuban pilots are happy with the aircraft and so are the passengers. The vehicle has reasonable fuel consumption for the jet of its class: about 1.8 tons of kerosene per hour. Some faults have taken place, but nevertheless the customer is satisfied. International flights will be started after delivery of the second aircraft. The jet performed its first flight in Kiev on June 24th. At present the aircraft is being prepared for delivery. I believe that we will be able to prepare the second An-158 for acceptance over the next 20 days. We hope to sign the firm contract for delivery of three more An-158s to Cubana at MAKS-2013. The jets may be delivered to the customer next year.

Q: Will the order for An-148s assembled by VASO placed by the Ministry of Defense help or discourage IFC?

I believe that the order for 15 An-148s placed by the Ministry of Defense will help develop the production of these jets at VASO. All the more so the price of one jet is high. The order is profitable for the enterprise and it will not only help to cover VASO’s outlay, but also continue the development of technologies, implementation of efficient and energy-saving production methods. Nowadays it is very important not to abandon the aircraft industry at its current level. We need to develop the technologies in order to increase the efficiency. An-148 program must be profitable for the enterprise in order to increase the labor efficiency. The enterprise, Ministry of Defense and other customers will benefit from it.

VASO will have a high workload in the nearest future thanks to the order placed by the Ministry of Defense (MoD). But the enterprise is willing to develop commercial programs too. Moreover, VASO will need at least one year in order to implement the previously signed commercial contracts. Then the MoD will start financing the enterprise. We plan to take delivery of two more An-148s this year and deliver them to Angara Airlines. I remind you that IFC is the largest An-148 customer of VASO. Voronezh-based enterprise has already delivered nine out of 34 ordered An-148-100s to IFC. At present these jets are included in the IFC’s books and successfully operated by Rossiya – Russian Airlines and Angara Airlines.

Q: The long-haul wide-body A350 XWB aircraft performed its maiden flight three days prior to the opening of Paris Air Show. The jet flew over the airfield at Le Bourget on June 21st. Are you interested in purchasing these jets?

I believe that А350 is a very interesting aircraft. This is the advanced-technology jet, but we are not going to expand our backlog of orders in the near term, because it is already large enough. IFC finalized contracts for delivery of three types of aircraft in June. The jets will be delivered to us over the next few years. Shortly before the opening of Paris Air Show our shareholders and governmental agencies approved the contracts for delivery of 82 jets (50 MS-21s and 32 CSeries aircraft). We have also signed an agreement for delivery of 20  Sukhoi Superjet 100 jets at Le Bourget. Thus we have ordered over 100 new aircraft. Moreover, we are continuing the implementation of contracts with Antonov State Enterprise (for delivery of 20 An-158s) and VASO (for delivery of 34 An-148s).

In the near term we will start the implementation of the placed orders. At the same time IFC is ready to use the sale - lease back scheme (the lessor purchases an aircraft from the carrier and then leases it to the seller) while working with transparent and trusted companies. However, our financial capacities are limited. I don’t think we will purchase anything in the near term. However, I do not rule out negotiating with Airbus on deliveries of their new liner in future.