27 February 2014

"Results of 2013 showed that we managed to lay a solid foundation for further reforms based on the best international practices and in compliance with the holding development strategy by 2020,” said Maxim Kuzyuk, CEO of Aviation Equipment Holding. “During the previous year, the enterprises affiliated to Aviation Equipment modernized their production and conducted technical re-equipment of facilities, carried out research and development works, mastered innovative products manufacturing and developed cooperation with Russian customers and foreign partners."

Within the priority task to enter the global market and expand its presence in the aircraft (A/C) aftersales service market, the Holding, in collaboration with Boeing established the Aircraft Service Centre (ASC) and launched the Spare Parts Distribution Centre (DC) for domestic and foreign aircraft at Sheremetyevo Airport. In 2013, DC's turnover amounted to 200 mln roubles. The next step was the partnership memorandum, signed in July with an American Company Curtiss-Wright Controls in order to create an innovative fire protection system. In August, a similar agreement was entered into with UTC Aerospace Systems related to landing gear support and control system. The third party that signed the document was Boeing, in the interests of which the products would be manufactured.

Considerable attention was paid to certification of quality management system of enterprises and their production processes to meet international standards and requirements. Thus, Aviaagregat, a part of Aviation Equipment, is under certification of product quality conformity to ISO 9001:2008 and EN/AS 9100:2009 standards and certification of production under NADCAP system specialized international standards. Currently, certification has been initiated by other plants being a part of Aviation Equipment, in particular, UNPP Molniya and UAP Hydraulics.

In 2013, an investment program of the Holding was developed by the end of 2016, under which the scope of financial support to technically re-equip the enterprises would be more than 9.5 bln roubles. In particular, production modernization has been started at NPP Start, Aviaagregat, MPO named after Rumyantsev, UAP Hydraulics, MMZ Znamya and MKPK Universal. Since 2014, the production and testing facilities will be modernized at other sites including Kotlas electromechanical plant, NPP Zvezda and NPP Respirator.

A block of shares of 16 enterprises amounted to 8.4 bln roubles obtained by the Holding from Rostec in December 2013 became an important stage in formation of Aviation Equipment corporate structure. The Aviation Equipment's authorized capital is more than 8 times increased and market value of assets reached 12 bln roubles. Thus, Aviation Equipment moved to a self-government model for the enterprises belonging to it that envisages increase of Holdings' responsibility for decisions taken.

Besides, "Competitiveness-1" subprogram that provides for innovative products development was successfully implemented in 2013. In compliance with it, the Holding developed a set of full-scale and electronic mock-ups of innovative aviation systems for civil aircraft and helicopters to be serially produced in Russia by 2025. As a part of the project, PAC FA Ufa Unit Production Association developed a system of SPTSu-7.5 DC power supply and plasma ignition units for it.

Aviation Equipment's important achievement in 2013 consisted in creation of the first in Russia educational program in the field of system engineering, which was successfully launched on the base of the System Engineering Higher School (SEHS) of Moscow Institute of Physics and Technology (MIPT). It was created based on experience of the best foreign universities including Massachusetts and California Institutes of Technology, MIPT, considering primary consumers' demands. The Master's degree program major "High Technologies and Innovation Economics" shall make it possible to provide in-service training and qualify approximately 20 engineers already this year.

Formation of competence centres has become another important area of technological and industrial development of the Holding. Thus, the pilot projects of technological clusters on the base of Ufa Unit Production Association (UAPO) and Aviaagregat plant in Samara, being a part of Aviation Equipment, were successfully launched in 2013. In the future, Ufa Competence Centre will fully provide all Holding's enterprises with casting blanks, and Samara Mechanical Treatment and Engineering Centre will establish effective technological preparation of production and manufacturing of hydraulic cylinders and other products of mechanical production. In the longer term new competence centres will help significantly reduce the cost of component and system production for the promising Russian aviation. The economic effect from establishment of a similar centre only due to the reduction of operating expenses and expenditures for labour compensation at the enterprises may exceed 200 mln roubles, and labour productivity at the Holding's Competence Centres will run up to 10 times compared to the average output of enterprises that corresponds to the level of labor productivity at the world's leading aircraft engineering enterprises.

Aviation Equipment Holding is specialized in the development, production and aftersales service of aircraft systems and units. In addition, the Holding manufactures parts and units for such industries as oil and gas, transportation and energy. Aviation Equipment includes 35 companies located throughout the country — in Moscow, Moscow region, Ufa, Samara, Ulyanovsk, Omsk, Arkhangelsk region and other regions of Russia. The Holding is a part of Rostec. The key partners and customers are the United Aircraft Corporation, Russian Helicopters, United Engine Corporation as well as Aeroflot, Siberia, UTair, GTK Russia, etc.

The Russian Technologies (Rostec) State Corporation is a Russian corporation, established in 2007 to promote the development, production and export of high-tech industrial products for civilian and military purposes. It includes 663 organizations, 8 holding companies of which have been currently formed in the military industrial complex and 5 holding companies — in civil industries. Rostec organizations are located within 60 territorial subjects of the Russian Federation and supply products to the markets of more than 70 countries. Rostec's revenue in 2012 amounted to 931 bln roubles and net profit – 38.5 bln roubles. Tax deductions to the budgets of all levels exceeded 109 bln roubles.