Russia reboots An-124 Ruslan production

Yesterday Russian President Dmitry Medvedev ordered the government to build 20 An-124 Ruslan aircraft by 2020 for the Defense Ministry, according to daily Kommersant. Medvedev’s order provided for cooperation with Ukrainian developers and manufacturers on construction and promotion of the Ruslans. Kommersant said that commercial entities were ready to acquire more than 60 of the planes. Yegor Samusenko: Military aircraft orders usually indicate the start of serial production of any freight plane, as most commercial orders are conditional upon orders from militaries. The start of serial production of the An-124 would be beneficial for Motor Sich (MSICH), which makes its engines. Each An-124 airplane uses six D-18T engines, which cost USD 3-5 mln per unit at current prices. Thus, if ~82 An-124 airplanes are made by 2020, this would bring ~USD 150-250 mln in additional annual revenues to Motor Sich. Though the effect is clearly positive for the stock, we urge caution until the first contract is signed.