More on Russian Aviation Industry Restructuring

Vedomosti reported today on further consolidation plans in Russia. Announced at the Session on the Development of the Aviation Engine Industry, held in Saint Petersburg and attended by Vladimir Putin yesterday, the government is undertaking steps to integrate the various companies involved in the production of aircraft engines. A rough English overview can be found on RIA News.

Current plans call for the creation of four holding companies that would each consolidate the various entities invovled in engine development and production for the major suppliers. As such, they are to be headed by Salut, Klimov, Kuznetsov and Saturn, respectively. Of these, the first is practically complete and the second is underway. There are doubts if the third and fourth will succeed, for financial and legal reasons.

Whatever the specific sector, the consolidation schemes are generally similar. Essentially, the Russian government buys large or controlling shares in the various industry companies, whether maritime, aviation, nuclear, etc. It then creates a new entity, for which the majority capital is formed with the government's shares in the companies integrated in the new entity.