GlobalData : Russia-Ukraine conflict could destabilize Russian aircraft manufacturing sector, says GlobalData

08 Apr 2022
Russia-Ukraine conflict could destabilize Russian aircraft manufacturing sector, says GlobalData Posted in Business Fundamentals

Aviation is one of the key sectors that contribute to Russian economy in terms of revenue, employment and regional connectivity. The country has a noticeable presence in the passenger aircraft market through Sukhoi Superjet 100 and Irkut MC-21.

The Russian aviation sector has been procuring commercial aircraft, spare parts, equipment, and allied services from global suppliers for a long time. It primarily sources avionics, engine parts, power systems and allied components. The country also exports major raw materials, including titanium, to overseas aircraft manufacturers.

As a result of economic sanctions and the ongoing war, Russian aircraft manufacturers will be adversely affected due to the lack of adequate parts and maintenance services, which could result in contract terminations and a delay in the supply of aircraft to global customers.

The closure of airspace has left owned and leased aircraft grounded in parts of Russia, Europe and North America, which could lead to the aircrafts' overall working condition to deteriorate.

Impact on Global Companies

Italy based Leonardo suspended its business activities in Russia, primarily impacting the civil helicopters segment. German aircraft engine manufacturer, MTU Aero Engines (MTU) announced its plans to source raw materials from other markets in the wake of sanctions on Russia.

Pratt & Whitney, Collins Aerospace, Raytheon and Honeywell Aerospace have also suspended all services including the supply of aircraft parts. CAE, a Canadian manufacturer of simulation technologies, modelling technologies and training services suspended all services and training to Russian aircraft and airline operators. It also abandoned the sale and service of simulators to Russian airlines.

Apart from parts supply, Boeing also suspended business activities with VSMPO-Avisma, a supplier of titanium, a key metal used in aircraft manufacturing. Airbus and Embraer have also ceased its operations related to Russian companies.

The Swiss government banned entities from providing maintenance, repair or inspection services of aircraft and aircraft parts to any person or entity in Russia. Recently, China also refused to supply aircraft parts leaving Russia to try its luck in India, Turkey and other countries.