Boeing-Antonov contract could revive Ukraine’s air industry

A subsidiary of the Boeing top aerospace company signed an agreement on cooperation with the once glorious Ukrainian Antonov Enterprise. Antonov and Aviall Services Inc. signed the deal at the Farnborough International Airshow in the United Kingdom. According to it, Aviall will supply the materials to create components for new Antonov planes and in the future will service its planes across the world. This cooperation gives hope for the Ukrainian enterprise to finally get out the deep crisis caused by the cessation of cooperation with Russia and a number of inner aspects. The Ukrainian side stated that the deal will provide a reliable partner for Antonov and the important integrating link for purchasing components in terms of the program of import substitution. The program became necessary after once close trade ties between Ukraine and Russia were severed following Russia’s occupation of Crimea and aggression in Eastern Ukraine. So let’s take a look at how Antonov got to a crisis, why the cooperation with the Boeing subsidiary can help it get out of it. But first, why Antonov is great.

What made Antonov great?

During Soviet times, air manufacturing was one of the most high-tech fields in Ukraine, together with rocket production. The latter was mostly related to the defense area, while aircraft engineering was the leading high-tech field in both the defence and civil industry. The aircraft manufacturing and services company Antonov was established in 1946 in Novosibirsk (then a Soviet and now a Russian city) and a few years later was transferred to Kyiv. It is named after the Soviet constructor Oleg Antonov. It was him who created 52 types of sailplanes and 22 types of planes. Among them the largest and the most load-lifting - Antey and Ruslan. His first popular invention was An-2. At first it was used mostly in agriculture and then became a multifunctional model. Its mass production started in 1949.

Thousands of An planes were exploited across the world. They turned to be so functional that many of them still fly. Up till the 90s, Ukraine constructed hundreds of An planes a year. Now, Antonov is world known for its aircraft An-225 or Mria (meaning “Dream” in Ukrainian) - the largest and most powerful transportational plane in the world. Its development started in 1985 and lasted three and a half years. Its head constructor was Viktor Tolmachev. Mriya set a number of world records - for transferring the maximum amount of cargo, for load capacity, for transferring the longest monocargo in the world, for transferring the hardest monocargo in the world. In total, it set about 240 records and made it to the Guinness Book of Records. However, so far only one Mriya aircraft exists in the world. And there are not enough resources for finalizing the construction of a second one. Unfortunately, in recent years Mriya remains the only thing Antonov can be proud of. Nowadays the company earns money not from development and construction, but from transportation.

What are the problems with Antonov?

The problems of the air branch in Ukraine started long before the beginning of the de-facto war in Ukraine initiated by the Russian Federation in 2014. After the Soviet Union collapsed, Ukraine’s leaders did not pay proper attention to the high-tech industry. So it started to decline. Anatoliy Vovnianko, ex-chief designer of Antonov, describes the reasons for the troubles in his article called “How Antonov State Enterprise is dying.” According to the engineer, the major problems started in 2005, when Antonov’s general designer Petro Balabujev resigned because of disagreeing with the government plan of reforming the industry. Since that time the development of new aircrafts in the Antonov enterprise stopped. In 2015, even one-off production stopped.

“Since 2014, there were no contracts for the An-148, An-158, An-74, An-140 created a long time ago as well as for the ‘new’ An-178 and An-132,” wrote Vovnianko in his article in the beginning of 2018.

During 2015-2017, Antonov switched 3 chief managers. Vovnianko stresses that neither of them had any relation to aircraft construction. Their main task was to manage the financial flows coming through the enterprise:

“During the presidency of Mykhailo Hvozdev [he became acting president of the enterprise in 2015 - Ed], aircraft construction stopped in Ukraine altogether. However, the amount of signed memorandums, negotiations on negotiations, PR campaigns in Ukrainian media significantly increased,” writes the engineer.

The managers of Antonov mostly used old aircrafts for their PR campaigns. The events which were presented as great achievements could hardly be called so. For example, in 2017 Antonov announced the launch of a project on constructing a series of An-132 aircrafts in Saudi Arabia. For this, a factory should have been built in the country. However, now the project is under question and has been demoted to the “potential” category. In terms of it, Antonov presented a pilot sample of a plane. According to Oleksandr Donets, the new Antonov chief who entered the office in May 2018, the Saudi side has only ordered a full technical and economic justification of building the factory for constructing the planes. The war with Russia created additional trouble for the enterprise.

The dependence on Russia

During 2005-2014, Antonov lost all the markets except Russia due to bad management.

“Even the orders for An-148 and An-158 produced in Ukraine for Cuba and North Korea were provided by the Russian company IFK,” says Vovnianko.

The enterprise's dependence on Russia was also significant because over half of the components for the aircrafts were coming from there. And before the war in Donbas started, the Ukrainian side did nothing to change this dangerous situation. In 2014, Antonov’s collaboration with Russia in aircraft construction became impossible, which only worsened the situation for the enterprise. In 2015, the Ukrainian government decided to pass the branch from the Ministry of Economic Development to Ukroboronprom, the union of multiprofile enterprises of the defence branch. So far it has not brought results, as the state defense sector does not have enough money to order aircrafts. What does the contract with the Boeing subsidiary solve The collaboration with Aviall can break Antonov’s vicious cycle. Deutsche Welle relates Boeing’s interest in collaboration with Ukrainian Antonov to the global trends of the air branch: the air transportation market is booming. In its turn, this creates the demand for passenger and transport aircrafts:

“The growth is so high that even such leading plane manufacturers as Boeing and Airbus, despite the scale, of their production, can’t implement contracts and provide planes of some classes to their clients in time,” writes the media referring to the research of analysts of the international consulting company AlixPartners.

Because of the above mentioned reasons, Ukraine has fallen out of the global trends. But it can join back in. As explained by president Donets, collaboration with Aviall helps Antonov to solve its problems because:

• The enterprise will have a steady reserve of titanium and aluminum.
• Antonov representatives hope that Aviall’s supplies will totally meet their need in components, including radio communication ones. Before, the components were supplied by Russia.
• Last, but not least, Boeing will help the Ukrainian enterprise in the service and after-sales support for airplanes of the An family from mutual production. If a component received from Aviall fails, the American company will deliver it to any corner of the Earth where the company’s plane will be placed. So far the absence of maintenance centers was one of the main problems of the Ukrainian enterprise and the main fear of Antonov’s potential clients.

Antonov representatives say that the collaboration with the American company will help them actively provide the market with the model line of An-158 and An-158 passenger aircrafts, as well as the An-178 transport carrier. The boom in the air transport market gives a chance for the development of Ukrainian air branch as well. Another positive factor for Antonov is that finally it got a manager who has experience in the air branch. Oleksandr Kryvokon, the predecessor of current president Oleksandr Donets, left the enterprise with a scandal - the collective of Antonov expressed its mistrust to the ex-acting president, stating that it doesn't see any future of the company under his management. Donets, who entered his office in May 2018, has worked in the field since the late 1980s. He maintained engines and managed the test crew of the An-70 military transport aircraft. Later he headed the aviation factory Aviant, state aviation factory Ukrayina, the company Ukraerorukh and returned to Antonov in 2016 to the position of the vice-president of production. Nevertheless, his competence as well as the government’s strategy for the revival of the industry until 2022 is yet to be seen.