{"id":32497,"date":"2018-02-01T18:46:52","date_gmt":"2018-02-01T18:46:52","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2018\/02\/01\/russia-giant-rostec-reportedly-planning-united-aircraft-takeover\/"},"modified":"2026-08-07T22:39:48","modified_gmt":"2026-08-07T22:39:48","slug":"russia-giant-rostec-reportedly-planning-united-aircraft-takeover","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/global\/europe\/2018\/02\/01\/russia-giant-rostec-reportedly-planning-united-aircraft-takeover\/","title":{"rendered":"Russia giant Rostec reportedly planning United Aircraft takeover"},"content":{"rendered":"\n

MOSCOW \u2014 Russian President Vladimir Putin<\/a> has reportedly signed off on a Ministry of Industry and Trade proposal to for defense and high-technology holding Rostec <\/a>to help fund a high-profile civilian airliner project managed by the United Aircraft Company<\/a>.<\/p>\n\n\n\n

According to the Kommersant newspaper, citing several unidentified government and industry sources, the 30 billion ruble (U.S. $535 million) investment in United Aircraft\u2019s MS-21 commercial airliner project may pave the way for an eventual takeover of the company \u2014 which is Russia\u2019s second largest defense contractor, and the world\u2019s 14th largest according to the 2017 Defense News Top 100 ranking<\/a> of global defense enterprises.<\/p>\n\n\n\n

Putin reportedly signed off on the proposal by stamping a January 23rd letter from Industry and Trade Minister Denis Manturov, according to an unidentified Kremlin source cited by Kommersant. In the letter, according to Kommersant, Manturov wrote that Rostec has \u201cconfirmed the possibility of allocating about 30 billion rubles to the MS-21.\u201d <\/p>\n\n\n\n

Kommersant was unable to secure official confirmation from the Kremlin, and a request for comment from the Industry and Trade Ministry went unanswered. When approached by Defense News for comment, the United Aircraft Corporation declined to comment on the proposal for Rostec financing of the MS-21 project. However, a source from United Aircraft spokesman said that \u201cany aircraft development program such as the MS-21 is investment intensive. And capital investment is better than borrowed investment.\u201d Ultimately, he added, such a decision isn\u2019t even up to Rostec, \u201cas the decisions are made elsewhere.\u201d <\/p>\n\n\n

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Rostec has heavy influence in both commercial and defense markets, primarily pulling in Russian tank production. Defense News Executive Editor Jill Aitoro spoke to CEO Sergey Chemezov during IDEX in Abu Dhabi to find out what is ahead for the company.<\/figcaption><\/figure>\n\n\n


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The reported MS-21 financing proposal is seen in Moscow as the first step in a broader play by Rostec to consolidate its control over the Russian defense industry. In 2015, the company\u2019s former president, an experienced aerospace engineer who one lead MiG and Sukhoi named Mikhail Pogosyan, was replaced by former Deputy Industry and Trade Minister Yury Slyusar. <\/p>\n\n\n\n

Slyusar is considered to be an ally of Sergey Chemezov, the head of Rostec. Chemezov, himself reported to be an old friend of Putin\u2019s, has presided over the gradual expansion of Rostec\u2019s defense industry holdings over the past decade. Rostec today controls over two-thirds of the Russian defense industry. Acquiring UAC would be a major expansion of its holdings. <\/p>\n\n\n\n

\u201cIt is an open secret that Rostec is trying to absorb as much of the industry as they can,\u201d a defense industry source told Defense News on a condition of anonymity. \u201cRostec makes certain moves, and then Manturov supports them. The company is, in effect, a kind of shadow ministry of defense industry production.\u201d<\/p>\n\n\n\n

But UAC\u2019s fate is not yet sealed. According to Kommersant, Rostec itself has reservations. If the company takes control of UAC, it will also find itself responsible for financing the company\u2019s projects beyond the MS-21 airliner. With development of high-end military aircraft going on at Sukhoi, MiG, and even Tupolev, such a burden could end up being substantial. <\/p>\n\n\n\n

But jockeying for control over the company continues behind the scenes, Kommersant reported. In November, the newspaper reported that the Industry and Trade Ministry had already worked out a proposal with the Economic Development and Finance Ministries by which the state\u2019s 91.7 percent ownership of the company would be transferred to Rostec. <\/p>\n\n\n\n

That proposal was blocked by Deputy Prime Minister Dmitry Rogozin, who\u2019s portfolio includes oversight of the Russian defense and space industries. Rogozin has argued that there is no economic justification for such a transfer. Manturov\u2019s proposal, however, is supported by Prime Minister Dmitry Medvedev, Kommersant reported. <\/p>\n\n\n\n

\u201cRogozin is lobbying in the other direction,\u201d the defense industry source told Defense News. \u201cHe is pushing for a merger of United Aircraft Corporation with Roscosmos, the state space corporation, in an effort to create a sort of super aerospace company. But Rogozin is much weaker than Manturov and Chemezov, so if Chemezov really wants it, he will ultimately get it.\u201d<\/p>\n\n\n\n