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MiG Takes a Heading to Yemen

The Russian corporation is conquering the Middle East

Yesterday it became known that RSK MiG will sign two contracts for a total of 2.3 billion dollars in the very near future. Within the framework of the agreement, the corporation will overhaul 66 old MiG-29 fighters in India an deliver 32 new MiG-29SMT to Yemen. As a result, MiG’s orders on hand will double – to 4.5 billion dollars. Besides that, industry experts expect a speedy signing of a series of new contracts for the delivery of MiGs to Middle East countries. 

Yesterday, the MDM-Bank analytical service, which is stepping forth as the organizer of the corporation’s new  funded debt, disseminated information about two new RSK MiG contracts. According to MiG, the corporation and the air force and air defense headquarters of the Republic of Yemen has signed a protocol of intent for the delivery to the country of 32 MiG-29SMT airplanes for a total of 1.3 billion dollars. Moreover, the RSK has won a tender for the upgrade of 66 MiG-29 delivered earlier to India for a total of 0.85 to 1 billion dollars. According to MDM-Bank analysts, the contracts will be signed in the first quarter of 2007. However, source X in the aircraft industry has specified that the deal with India will be entered into in September, and with Yemen – in November – December. They reported at the RSK yesterday, that taking into account these two contract, the company’s orders on had will be increased from 2.5 to 4.8 billion dollars by 2009. Thanks to the new orders, MiG estimates increasing earnings in 2007 to 1.1 billion dollars versus 245.8 million according to 2005 results. 

The contract for the upgrade of the Indian MiGs was agreed to a long time ago, but the delivery to Yemen is news. Industry analysts evaluate this deal as the RSK’s first step to expanding work in the Middle East and North Africa marketplace. “The former corporation management earlier had forecast for 2003 – 2004 a huge wave of MiG orders in these regions,” the deputy director of the Center for the Analysis of Strategies and Technologies, Konstantin Makienko, notes. “The wave has been delayed and its scales are less than expected. But it is growing.” 

It is recalled that last year, RSK MiG entered into a contract with Yemen after 2003 which provided for the delivery of 6 MiG-29SMT and the upgrade of 14 MiG-29SEh sold earlier. Moreover, in 2005, two MiG-29SEh fighters were upgraded to the MiG-29SMT level for Eritrea. In 2005, a contract also was entered into for the delivery of spare parts and equipment for MiG-29 airplane to Sudan. In the beginning of 2006, the RSK signed a contract for the delivery of 28 MiG-29SMT and 6 MiG-29UBT fighters to Algeria for 1.5 billion dollars. According to MiG information, “there are good prospects for the realization of broad-scale programs for the delivery of MiG-29SEh airplanes to Egypt and other countries.” According to X, the contract for the delivery to Egypt of 40 MiG-29SMT will be signed before the end of 2006. This deal will be carried out on a trade in ((in English)) scheme: the new aircraft will be delivered in exchange for the old MiG-21, which have remained without any Russian servicing for more than 30 years. 

Other huge contracts for the delivery of MiG airplanes to the Middle East are expected in the very near future. “Our buyers here are Syria and Libya,” Mr. Makienko thinks. The purchase of a huge batch of MiGs by Damascus is most likely. Libya is oriented right now at the heavy fighters of the Su-30MK type. But even here, one has to strive to fulfill a package deal, selling simultaneously both heavy and lightweight aircraft, as this was done in Algeria. And other buyers are possible, for example, the United Arab Emirates, although marketing MiGs there is a more complex problem.” However, at the same time, market participants are certain that the deal with Syria, if such is put together, will not be paraded around by Russia because of the worsening of the situation around Lebanon. Most likely, the RSK will announce a new contract at the last moment.

Source: 31.08.06, Kommersant, Correspondent: Konstantin Lantratov