United Aircraft Corporation (UAC), Ilyushin Finance Company (IFK), and Moskovia Aviation have successfully signed a $1.8 bln supply contract for 79 An-148 jets. The contract between the three aircraft companies was signed in Voronezh, the primary location for serial production of the jet. UAC and IFK also expect to win the tender to supply 34 An-148 jets to UTair. Aggregate demand for the jet is estimated at 600 aircrafts by 2022, and Ukrainian engine manufacturer Motor Sich is the primary supplier of the D-436 engine for the An-148 jet.
We see the news as POSITIVE for the company as the contract framework is superior to Motor Sich’s existing contracting system. Under the conditions, Motor Sich will be paid “per hour of operation” rather than per engine, with the manufacturer servicing the engine for the duration of its use. The conditions allow more flexible pricing and improved end-product profitability, as well as faster sales growth from a larger share of repair work in the revenues structure.
Denis Shauruk Analyst (+380 44) 490-1721
