A First for Russia's Booming Industry

MOSCOW - Russian Helicopters will become the first Russian government-controlled industrial holding producing military hardware to go public, aiming to raise $500 million in an initial public offering on London and Moscow exchanges.
"The offering is expected to consist of the sale of the existing shares primarily by the company's major shareholder, Oboronprom, as well as up to $250 million of primary shares in the form of Global Depositary Receipts," the company said in a statement April 12.

One GDR represents one ordinary share.
"The company currently plans to use net proceeds ... to pay off existing debts and to fund certain mandatory tender offers for shares in its subsidiaries," the company said.
Russian Helicopters, which claims to be the No. 1 global producer of attack helicopters and the world's leader in producing medium and heavy-lift rotorcraft, was created by the government in 2007 to bring the country's helicopter-makers into a single vertically integrated holding.
It is 100 percent controlled by Oboronprom, another government-controlled holding, that controls the country's engine-makers.
The company holds majority stakes in every Russian major helicopter-maker, including Mil (72.38 percent), Kamov (99.79 percent), Ulan-Ude Aviation Plant (75.09 percent), Kazan Helicopter Plant (65.9 percent) and several others.
The consolidation of the helicopter-makers was completed in December, when Russian Helicopters announced that it had boosted its share in the Rostvertol, Rostov-on-Don-based plant, from 22.76 percent to 75.06 percent.
Russian Helicopters plans to announce the placement price on May 11, and the main trading session will start May 16.
Bank of America Merrill Lynch, BNP Paribas and VTB Capital, an investment arm of the Russian government-controlled VTB bank, have been appointed as joint global coordinator and book runners.
VTB Capital has valued Russian Helicopters at $2.5 billion to $3 billion ahead of the initial public offering in Moscow and London, Russian official news agency RIA Novosti reported April 14. BoA Merrill Lynch has reported the company value is $2.2 billion to $3.2 billion.
Officials at Oboronprom and Russian Helicopters declined to comment on the initial public offering on the record, citing its sensitivity.
"We are already the undisputed leader in some of the most attractive and fastest growing markets in the global helicopter industry. Our IPO comes at a time when we enter into a new cycle of long-term growth, with strong demand and firm orders from our existing customers, and increasing opportunities to win new customers in new markets around the world," Dmitry Petrov, CEO of the Russian Helicopters, said in an April statement.

Market Potential

Helicopter-making is the booming industry in Russia, with strong export prospects and promising domestic orders, both state and commercial ones.
"Last year, we even created a special department to trade in helicopters," said Vyacheslav Davidenko, spokesman for Rosoboronexport, the official arms exports agency. "The global demand for the Russian helicopters is growing."
Latin America, India and Southeast Asia remain the biggest buyers of Russian helicopters, Davidenko said.
In 2009, 30 percent of the 183 helicopters rolled out by the company were sold to foreign militaries, half of the total was domestic and foreign commercial civilian orders, and the remaining 20 percent was procured by government agencies, including the Defense Ministry.
The company was 69 in the Defense News Top 100 ranking in 2009, with the total revenue of $1.82 billion, revenue from defense of $813.8 million, and profit of $173 million.
In 2010, the holding produced 214 helicopters, Russian Helicopters said.
The company has not yet disclosed its 2010 financial results, but its website said that the company accounted for about 85 percent of helicopter sales in Russia and the former Soviet Union, and 13.5 percent of worldwide helicopter sales in U.S. dollar terms.
Yuri Slusar, head of the aviation industry department at the Russian Industry and Trade Ministry, said April 27 that output of the Russian helicopter-making industry grew by 2.5 times between 2003 and 2007, while revenues grew 2.1 times between 2006 and 2010.
"This is the leading sector, they are profitable, having total revenue of some $2.5 billion, they have a profit margin of 10-12 percent," he told journalists in Moscow.
He added that in the past decade, Russia was the world's third biggest producer of the military helicopters, while it ranked seventh in the 1990s.
Under the 2011-20 state arms procurement program, the Defense Ministry and the security agencies plan to buy 1,000 helicopters of different models and types.
Deputy Defense Minister Vladimir Popovkin told journalists that $29 billion will be spent on helicopters under the program through 2020. More than 100 choppers are to be delivered to the Russian military in 2011, he added.
In an April 15 statement, company officials said that it had signed a dealership treaty with the Brazilian Qualy Group Brasil for delivery of 150 light Mi-34S1 helos.
According to an industry source, Russian Helicopters is now loaded with orders for 2011, 2012 and most of 2013
"Russia's recovering economy props the demand for helicopters by the big Russian companies, like Gazprom, that operate in remote and hardly accessible areas," said Roman Kirillov, the spokesman for the Russian Helicopters, said.
According to a company statement, its order portfolio by the end of 2010 counted 351 choppers, 20 percent of them being commercial and the rest being military; 204 helicopters have been ordered to be delivered in 2011.
Konstantin Makiyenko, a researcher with the Center for Analysis of Strategies and Technologies, a think tank here, said the outstanding design of the flagship among the Russian Helicopters, Mi-17 and its modifications, are the key driver behind the development of the Russian helicopter industry.

RUSSIAN HELICOPTERS

Founded: 2007.
DN Top 100 rank: 69.
2009 revenue: $1.8 billion total; $813.8 million from defense.
General director: Dmitry Petrov.
Employees: 38,177 as of 2009.
Average salary: $700 per month.

Libyan Rebels Say Italy Will Provide Weapons

BENGHAZI, Libya - Libya's rebel government said May 7 that Italy has agreed to supply it with weapons to fight against Moammar Gadhafi, but government sources in Rome said only "self-defense material" would be sent.
"They will supply us with arms and we will receive them very soon," Abdul Hafiz Ghoga, the vice chairman of the National Transitional Council, told reporters in the rebel capital Benghazi.

Ghoga said military officers from the rebel council had travelled to Italy, Libya's former colonial ruler, and reached an agreement with officials there for the supply of arms.
He gave no details on what weapons would be supplied.
If the arms supply goes ahead, that would make Italy the first European nation to provide weapons to the badly-armed and poorly-trained rebel force that has led the fight against Gadhafi since the uprising began in mid-February.
Foreign ministry sources in Rome said that Italy has agreed to send "self-defense material" to the rebels following agreements last month within the framework of UN Security Council resolution 1973.
They said these would not be assault weapons but gave no further details.
Italian Foreign Minister Franco Frattini said last month during a visit to Rome by NTC chairman Mahmud Jibril that Italy was thinking of sending "night-vision equipment, radars and technology to block communications."
Italy, France and Britain have each sent a small number of military advisors to Benghazi to help organize the ragtag rebel force.
Rome last month said it wanted the international community to consider arming the rebels under UN Resolution 1973, which authorized the use of all means to defend civilians.
U.S. Secretary of State Hillary Clinton and British Prime Minister David Cameron have both said they believe U.N. resolutions on Libya allow arming the rebels.
But other nations in the NATO alliance that is enforcing a no-fly zone over Libya and bombing Gadhafi's military have opposed arming the rebels.
Belgium came out against the idea and Germany has insisted there could be "no military solution" in Libya.
China and Russia, which hold permanent seats on the United Nations Security Council, have argued that NATO's bombing campaign may already be stretching the U.N. mandate.
The head of the rebel council said last month that "friends" had already supplied the insurgents with arms, without saying which countries had done so or what weapons they had provided.
Russia had been a traditional supplier for Libya since Soviet times but the lifting of a previous European Union arms embargo in 2004 opened up a new market to European contractors, who rushed into the oil-rich North African state.
The most vocal backer of lifting the embargo was Italy, which quickly became one of the top European arms suppliers to the Gadhafi regime before the uprising began in February.
France, Malta, Germany, Britain and Portugal also secured lucrative arms contracts with Tripoli.

After Grounding Raptors, USAF Eyes Other Jets' Oxygen Systems

The U.S. Air Force, which on May 3 grounded its F-22 Raptors, has now identified which other aircraft might be affected by defective oxygen generators.

U.S. airmen watch as a U.S. Air Force F-22 Raptor taxis toward a refueling station March 31 on the flightline at Kadena Air Base, Japan. The service has also probed oxygen systems on other jet models, too. (Airman 1st Class Maeson L. Elleman / U.S. Air Force)

Since at least November, the service has been investigating the On-Board Oxygen Generation Systems (OBOGS) aboard the F-35 Lightning II Joint Strike Fighter (JSF) and other tactical aircraft and trainers. The service grounded the F-22s after a spike in incidents potentially related to hypoxia.

"No other airframes have been stood down due to this investigation; however, a parallel investigation is taking place on the on-board oxygen generation systems on the A-10, F-15E, F-16, F-35 and T-6 aircraft," said Capt. Jennifer Ferrau, an Air Force spokeswoman for Air Combat Command (ACC), the service's primary body for training and equipping the combat air forces.
Equipment such as the OBOGS is fairly standardized across multiple aircraft types, said Hans Weber, who sat on the U.S. Federal Aviation Administration's Research, Engineering and Development Advisory Committee, and is the president of Tecop International, a San Diego consulting firm.
"It's a big deal if you're at high altitude and you run out of oxygen," Weber said.
At 50,000 feet, a human being has less than 10 seconds of useful consciousness, he said.
Air Force Gen. William Fraser, commander of ACC, ordered a stand-down of the entire 158-plane F-22 fleet on May 3, Ferrau said. The service has not determined how long the Raptor fleet will remain grounded, nor has the exact nature of the problem been identified, she said.
"We are still working to pinpoint the exact nature of the problem. It is premature to definitively link the current issues to the OBOGS system," Ferrau said. "The safety of our airmen is paramount and we will take the necessary time to ensure we perform a thorough investigation."
There have been nine suspected cases of hypoxia during F-22 operations since mid-2008, and recently there has been a jump in the number of such incidents.
"Over the last week, we have experienced five additional F-22 'Physiological-Hypoxia Like' events across the Air Force, which led Commander of Air Combat Command to establish the current F-22 stand-down," Ferrau said.
Fraser has ordered an OBOGS Safety Investigation Board to get to the cause of these incidents, which now total 14.
Most of the incidents are characterized as "increased frequency of pilot reported physiological incidents such as hypoxia and decompression sickness," Ferrau said.
Air Force sources said that an OBOGS malfunction was suspected in a November crash outside Joint Base Elmendorf-Richardson, Alaska, that claimed the life of Capt. Jeff Haney of the 525th Fighter Squadron.
Despite the known OBOGS incidents, the Air Force will not officially link the November crash to the oxygen generator malfunctions.
"It is inappropriate for us to comment on the F-22 crash in Alaska, since the accident investigation board report has not concluded," Ferrau said.
Lockheed Martin, which builds the F-22, has dispatched a five-person team of engineers to help with the Air Force OBOGS investigation, company spokeswoman Stephanie Stinn said.

New Tool Speeds F-35 Engine Work

U.S. Navy and Lockheed Martin engineers have created a new type of tool that will allow maintenance crews to perform critical repairs on the U.S. Marines' F-35B Lightning II Joint Strike Fighter (JSF) without removing the aircraft's jet engine.
Developed under the auspices of the Naval Air Systems Command (NAVAIR) at Naval Air Station Patuxent River, Md., the tool will be used to support the weight of an actuator that moves the main thrust-vectoring nozzle during the plane's short-takeoff/vertical landing mode. It was first used on the flight line on April 2.

The Navy-Lockheed team came up with the innovation because normally, the entire engine would have to be removed to replace the actuator. While removing the engine and reinstalling it is a complex and time-consuming affair, the actual replacement of the actuator is a comparatively minor procedure.
"If it's taking days to run through a process with JSF, and we can come up with a method to save time and money, we're all for that," said Bill Farrell, an engineering technician who worked on the project, in a video released by the Navy.
With the new tool, it takes about three hours to change the actuator. Previously, the process could have taken days to accomplish.
"Now, this maintenance time has improved by approximately one week - good for flight testing, and better for our war-fighter," said Jim McClendon, Lockheed's site director vice president, in a press release.
The new tool will help speed the F-35B's flight testing, which is underway at the Maryland base.
"This special tool will not only speed development of the Lightning II but also pay big dividends after the aircraft is delivered to the fleet," said Rear Adm. Randy Mahr, commander of the Naval Air Warfare Center Aircraft Division, a component of NAVAIR.

Guilty Plea From Submarine Inspector

Robert Ruks, a former inspector for Northrop Grumman Shipbuilding, pleaded guilty in U.S. District Court May 6 to two counts of lying about welds he should have inspected on U.S. Navy ships and submarines under construction at the Newport News, Va., shipyard.
A defective pipe joint weld on a submarine that Ruks had certified as properly done could have caused the loss of the submarine, as it was a certified SUBSAFE weld - critical to the ship's safety.

As a result of Ruks' false weld certifications, Northrop Grumman was forced to expend 18,906 man-hours to complete the reinspections, at a cost of $654,000, according to a news release from the U.S. Attorney's Office.
The issue came to light in May 2009 after co-workers suspected Ruks, a non-destructive testing weld inspector, was not being truthful about his inspection reports. Questioned on May 14 of that year by his supervisors, Ruks admitted he had falsely certified inspecting three lift pad welds on a submarine although, according to a statement of facts filed with his plea agreement, the inspections were not performed.
Ruks lied again on May 22, 2009, when he was questioned by agents from the Naval Criminal Investigative Service. According to the statement of facts, while Ruks admitted falsifying the lift pad weld certifications, he lied to the agents about the number of other ship and submarine hulls he had failed to inspect.
Discovery of the false inspections stung Northrop Grumman, which had experienced a series of unrelated problems with poor weld work done at the Newport News shipyard.
The shipbuilder, now spun off from Northrop as Huntington-Ingalls Shipbuilding, declined to comment on Ruks' court case, saying it would not comment on personnel issues. Ruks was terminated by the shipyard shortly after his lying came to light.
"Lying on weld inspection reports is a dangerous crime that threatens the safety of our Navy personnel," U.S. Attorney Neil MacBride, U.S. Attorney for the Eastern District of Virginia, said in the news release.
Between June 2005, when he was certified as an inspector, and May 2009, Ruks inspected and signed off on more than 10,000 welding structural joints on at least nine different ships.
Ruks performed most of his work on the submarines New Mexico (2,133 welds inspected), Missouri (3,169), California (2,002) and Mississippi (2,177). The smallest number of structural welds on any particular submarine was 23 on the New Hampshire and two on the North Carolina.
Just over 10 percent of the submarine welds were hull integrity or SUBSAFE joints involving critical parts. The inspector also performed 229 piping joint inspections on submarines.
Ruks is to appear for sentencing in the Newport News court on Aug. 12. He faces a maximum term of five years in prison, a fine of $250,000 and full restitution for each offense.

A400M Engine Wins Safety Certification

LONDON - The turboprop engine powering the Airbus A400M airlifter has been certified by the European Aviation Safety Agency (EASA).
Europrop International (EPI), the four-company consortium responsible for developing and building the TP400-D6 engine, said the milestone came after a test campaign that included more than 8,000 flight hours and more than 4,000 hours of ground testing.

The May 6 announcement came just days after EPI said it had signed an amended contract with Airbus Military settling outstanding issues related to the much-delayed and over-budget transport plane.
EPI involves partner companies Rolls-Royce, Snecma, MTU Aero Engines and Industria de Turbo Propulsores.
In a statement, EPI said the TP400 is the first large turboprop certified by EASA and the first military engine to be cleared by the agency to civil standards from the outset. At 11,000 shaft horsepower in a three-shaft configuration, the TP400 will be the most powerful turboshaft engine to enter service in the West.
Military certification is expected next year ahead of A400M deliveries getting underway to lead customer France around the turn of the year.
Airbus Military has orders from seven European countries for 170 aircraft, with an additional four being destined for export customer Malaysia.
The seven partner nations in the program are Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.

China urges world to back Pakistan in fight against terror

China reaffirmed its support on Thursday for efforts by its ally Pakistan to combat terrorism after the killing of al Qaeda leader Osama bin Laden by US forces, and urged the world to help Islamabad.

Foreign ministry spokeswoman Jiang Yu stopped short of directly criticising the daring raid by US special forces on Pakistani soil that ended with Bin Laden’s death but said national sovereignty “should be respected” at all times.

“Pakistan is at the forefront of the international counter-terrorism effort. The international community should understand and support Pakistan,” Jiang told a press conference.

“We support Pakistan’s position and understand and support Pakistan formulating and implementing a counter-terrorism strategy based on its national conditions.”

Since Sunday’s raid, Pakistan has been on the defensive over its failure to find Bin Laden, who was living in a compound near the country’s top military academy in Abbottabad.

Foreign ministry spokeswoman Jiang Yu stopped short of directly criticising the daring raid by US special forces on Pakistani soil that ended with bin Laden’s death but said national sovereignty “should be respected” at all times.
“Pakistan is at the forefront of the international counter-terrorism effort. The international community should understand and support Pakistan,” Jiang told a press conference.
“We support Pakistan’s position and understand and support Pakistan formulating and implementing a counter-terrorism strategy based on its national conditions.”
Since Sunday’s raid, Pakistan has been on the defensive over its failure to find bin Laden, who was living in a compound near the country’s top military academy in Abbottabad.
Islamabad has rejected those criticisms, with Pakistani Prime Minister Yousuf Raza Gilani saying that the United States and other countries shared the blame for not finding bin Laden sooner.