Procurement: China, Russia And Cheap Transports


June 16,2008: Two years ago, China placed an order for 38 Il-76 transport planes and Il-78s (tanker versions of the Il-76). It was believed that China was paying close to $40 million per aircraft, but it turned out that the actual price was half that. This has led to yet another squabble between China and Russia, as the seller tried to get a higher price after the deal was agreed to.

Inspired by the recently retired American C-141, the Il-76 is actually manufactured in Uzbekistan. That's because one of the Russian aircraft plants moved east during the German invasion of 1941, ended up in Central Asia, a part of the Soviet Union that became independent Uzbekistan in 1991. The Chkalov Tashkent Aircraft Production Company was the only one still manufacturing the Il-76. Over 900 Il-76s were manufactured there over the last thirty years, with nearly a hundred exported, so far, mainly to Cuba, Iraq, China, India, Libya and Syria.

However, until this Chinese order came along, Chkalov was surviving by manufacturing wings and other components for the An-124, An-70 and An-225 transports. In addition, it made replacement parts for the Il-76 and Il-114 aircraft. The Chinese order, however, proved more than the Chkalov firm could handle, even though it had fifteen partly built Il-76s on the production line. So at least 60 percent of the Il-76 production was transferred to a Russian firm (Ilyushin).

This meant that the order could not be completed until 2013, rather than 2012. This move indicated that the Russians believe the Il-76 has a future beyond this Chinese order. Now the Il-76 will have two production lines, as well as some protection against political problems in Uzbekistan (which needs the 18,000 jobs the Chkalov operation creates, but you never know.)

The Russians, however, were not as willing as the Uzbekis to lose money on the Il-76s they will be producing, and are demanding that the Chinese pay a price that will allow for a profit (like about twice what the Chinese are currently contracted to pay). Negotiations have reached the point where the Chinese are willing to pay more, but want guarantees that they will not get screwed on quality and warranty service. There is also talk of changing the contract to provide the new Il-476. This is basically an Il-76 with more modern engines, state-of-the art electronics and numerous other improvements. This version can carry up to 60 tons and is about 15 percent more fuel efficient. Russia wants to get some customers for the IL-476, so a deal may be done with the Chinese.




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