Deal Signed for 96 Motor Sich-Engine-Equipped An-148s by 2011

As part of their partnership agreement originally announced in August, the Ukrainian Aviation Corporation has signed a deal with Russia’s United Aviation Corporation to produce 96 An-148 aircraft by the end of 2011. The accord also foresees annual production of 36 An-148s thereafter by Russia and no less than 15-20 in Ukraine. The two entities also agreed to join forces in terms of R&D, marketing efforts, and the revival of An-124 Ruslan production. Motor Sich (MSICH: BUY) has signed contracts with the Ilyushin Finance Corporation (Russia) to supply engines for the An-148. Inna Perepelytsya: The new plans of the Ukrainian and Russian aviation corporations are bolder than our forecasts (58 An-148s by 2011 and 21 thereafter from both sides). We see the information memorandum bringing a new level of cooperation between the neighboring industries, especially for Ukraine whose An-148 project’s major customer is the Russian market. We maintain our production forecasts pending the realization of these plans and reiterate our BUY recommendation.