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Saturday October 11, 2008
Reuters
Aeroflot May Double USD$3 Bln Plane Order

Russian airline Aeroflot may double its planned USD$3 billion purchase of 22 long-range airliners, deputy general director Lev Koshlyakov said on Wednesday.

Aeroflot's board is due on Thursday to discuss offers from US-based Boeing of its 787 Dreamliners and Europe's Airbus of its A350 XWB model.

"Today we are looking at 22 planes, but that does not spell the end of the program. Without doubt, Aeroflot's needs are substantially greater," Koshlyakov said.

"We need no fewer than this number (of extra planes) by 2025."

Aeroflot's fleet of 90 passenger aircraft -- much of which is made up of ageing Soviet-designed models -- is in serious need of renewal, putting the company under pressure to make up its mind after mulling the order for a year.

Koshlyakov said it was possible Aeroflot would award the order to one of the bidders or split it. "Today we are looking at various options. They propose one producer or two," he said.

But, he said, it is unlikely the Aeroflot board will take a final decision on the order at Thursday's meeting. The question of doubling the aircraft order has not been put on its agenda.

Industry analysts favor Boeing's chances, noting that first deliveries of the Dreamliner will be made in 2008, while the competing Airbus is still at the design stage.

"I would speculate that they want to buy Boeing because the Boeing would be delivered earlier," said independent defense analyst and commentator Pavel Felgenhauer.

Aeroflot risks losing its place in the queue of Boeing customers if it does not firm up its order soon.

But, with Russia on Tuesday announcing its intention to boost its 5 percent stake in EADS and seek a significant say in management of the European aerospace giant, it will be difficult to turn down the Airbus offer.

Analysts say the EADS stake, bought by state-owned Vneshtorgbank, may be transferred to Russia's United Aircraft Company (UAC), a state-controlled business which will bring together plane makers Sukhoi, MiG and listed Irkut.

"Politically, it's important to buy Airbus. Practically, they need Boeing," said Felgenhauer.

Aeroflot's 22 plane order would exhaust a duty-free import quota it has been granted, however, and the company may have to push for a reduction in Russia's steep airliner import tariffs if it does bulk up its order.

(Reuters)

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