In a major press announcement on December 2, 2015 in Latvia, the Prime Minister Laimdota Straujuma came out to say the government supports the inclusion of a cause in the Agreement of Shareholders that prohibits “ airBaltic and its affiliated companies are prohibited from purchasing, renting or otherwise utilizing equipment produced by the military industrial complexes (of Russia) and their affiliates subject to sanctions imposed by the EU or by the international community and ratified by Latvia“, that says it all, when a government has to step in and make sure no ‘funny’ stuff is attempted to place Russian Sukhoi SSJ-100’s through some unethical/foul back door secret deals, to be forewarned is to be forearmed (aka advance awareness).
In fact, it has come to light that numerous alterations were made to the original proposal, and up to 20 controversial points were removed while the above clause was added, it smells of corruption that was caught early on and made public which then sank the whole scheme before it was hatched, but who was so eager to get Ralf Dieter Montag-Girmes into airBaltic with special ‘rights’ ? well all roads lead to CEO Martin Gauss unfortunately, but what was his motive ? saving airBaltic at all cost, saving the CS300 deal ? or profiting from SSJ-100 deal ?
I applaud the moves by Latvia to keep Russian aircraft out of airBaltic and encourage other EU member states to take the same steps to keep the SSJ-100 off their aircraft registry and away from local airlines, and I hope Air France/KLM will take harsh steps with code sharing CityJet and its planned SSJ-100’s, before a public backlash from their customers for using Russian aircraft built by Russia’s vast military industry now under EU/US/Canadian sanctions. For Europeans and governments it is a big deal, why help Russia’s military industry ? at a time it is once again aggressive and using force to destabilize several western oriented countries (e.g. Ukraine, Moldova, Georgia), and with now planned future expansion of NATO to include Bosnia and Montenegro, the Russians will be very angry, and I won’t even mention adding Georgia.
Sukhoi is part of United Aircraft Corporation (UAC), 85% owned by the state and a big part of Russia’s military industrial complex, with 18 enterprises all under current EU/US economic sanctions, and the above addition to the Shareholders Agreement at airBaltic should be adopted by ALL EU countries as soon as possible, as no country should be seen supporting Russia’s military industrial complex, and the SSJ-100 is a product of that complex, are you getting this in Ireland, Belgium, Denmark, Slovenia ? say Nyet to Sukhoi and its SuperJet !
Seems that their new “undesirable” and possible “security risk” German investor, with ties to the Russian aerospace industry, had an exclusive clause to provide aircraft to airBaltic, and it needs investigation who allowed such a clause in the Agreement, was it CEO Martin Gauss ? working with his old friend Hans Rudolf Wohrl of Intro Aviation who is in bed with the Russians having just signed on to lease 25 SSJ-100’s for his CityJet operation, who is peddling Russian aircraft in Latvia ? something not right about it all.
I bet if you connect the dots, Hans Rudolf Wohrl, Martin Gauss, Ralf Dieter Montag-Girmes, CityJet, VLM, Intro Aviation, Adria Airways, etc. an investigative journalist will uncover a very interesting story on how Russia/UAC/Sukhoi and their finance companies plan to penetrate the western aviation market, using Europeans with dubious morals and bring with it its corrupt Russian business practices with lots of airline professionals lined up to make a deal.
Anyway, read on and connect the dots with me in this story, I wish I had the time to dig deeper, but know that their is an all out concentrated effort to do EVERYTHING and ANYTHING to place Russian SSJ-100’s into Europe, as Russia’s pride and hope is on the line as is the crucial future success of the SSJ100 and even more importantly the future Irkut MC-21 narrowbody that will compete with the Boeing B737Max and Airbus 320neo lines in 4+ years time. So Europe just needs to keep an eye on events, hopefully various secret services and Interpol are watching events and ready to intervene if corruption is evident.
Latvia’s airBaltic is suppose to get 13+7 Bombardier CS100’s (ABOVE Center) starting 3Q/2016, though some agents/investors would like to buy/lease the Sukhoi SSJ-100 SuperJet (ABOVE Left), there is generational gap between the two, the SSJ-100 will be obsolete in 3 years time against the new regional jets from Embraer, Mitsubishi and Bombardier, its only attraction today is that thanks to massive state support, it is cheap upfront to buy and lease, but take the operation over a 15-20 year life cycle of operating costs, revenue and resale, and the SSJ operation will not not do well economically, especially against new programs and possible sanction risks.
With new sanctions the Russians will be cut off from western engines, avionics and components, the program will be dead in the water, and we wait and see what the Dutch criminal investigation finds next year on who downed MH17, and if it is found to be Russian supported separatist, Air France and KLM need to stop their relationship with CityJet, and the EU/US/Canadian sanctions need to include the commercial aircraft market, and CityJet and other SSJ-100 operators in Western Europe are grounded with their Sukhoi SSJ-100’s SuperJets, come on Europe say Nyet to the SuperJet !
The Mitsubishi MRJ90LR (ABOVE Right) just had its 1st flight on November 11, 2015, it has 223 orders and 185 options and similar in size to the SSJ-100, it is going to be a real winner with airlines, it is an airplane for the future, much better than the SSJ-100 and you know anything coming out of a Japanese factory will be very good, can’t say that about anything coming out of a Russian factory, except jet fighters, but commercial aircraft that have come out of Russia, have been junk by western standards, but at least the SSJ-100 has western design and avionics and engines, etc., but not an airplane you buy today to compete in 2018 and beyond. Not sure why the Iranians want to buy Russian aircraft after years of poor reliability and many accidents with their TU-154, TU-134, AN-140, Yak-40’s etc. while under international sanctions, now they are close to being able to buy what they want, why go backwards ? when you can buy the newest models of Embraer, Bombardier and Mitsubishi.
I have written on the Sukhoi SSJ-100 SuperJet several times, check out past 2015 articles (March 4, January 15, January 13, 2015 and a detailed Russian civilian aerospace analysis January 6)
This comes about as I have written about in my blog articles (of November 7, 2015 and November 14, 2015) on airBaltic, Estonian Air and CityJet warning Western Europe that the Russians are employing all kinds of “schemes” to get their Sukhoi SSJ-100 SuperJet into Western European airlines, to open up the western market and ultimately make it easier to sell its future Irkut MC-21 narrowbody.
The Sukhoi built SSJ-100 SuperJet is sold by Superjet International a joint 49% Sukhoi owned company and 51% by Italy’s Alenia Aermacchi Corporation which is also has a 50% in ATR with Airbus, a joint venture that is doing extremely well these days as ATR is at 90 deliveries per year, its highest ever.
Meanwhile, Finmeccanica (owner of Alenia Aermacchi) is not happy with its 2007 invetsment in SuperJet, according to CEO Mauro Moretti who is restructuring the struggling Italian conglomerate says he is not satisfied with SuperJet “very significant invetsment for NO return so far”, and rumors are he is seeking an exit strategy, well 8 years and only 100 aircraft deliveries (+/-75 in actual service), the program is deeply in trouble, no wonder ex-Embraer sales executive Alex Glock left his Senior VP Commercial position at SuperJet after less than 6 months and went over to Bombardier (sadly one sinking ship to another), it says a lot about what is not right at SuperJet.
The Russians now have several well positioned and financed “dubious intermediaries/agents” investing in airlines, looking at privatizations, funding management buyouts to paying owners and investors big money to move their large inventory of SSJ-100 ‘white tails’ at any cost, it is a major priority in Russia to make the aircraft a success in the west no matter what.
What happened in Latvia is a case in point, the 99.8% Government owned airBaltic has been barely profitable and has 13 x CS300’s n on order plus 7 x CS300 options, worth $1.45 billion. The airline has had a difficult time raising money to finance the new aircraft as its shareholder equity was negative $-82 million, so it was seeking an investor to shore up the equity. So with $57 million from the “undesirable” German investor plus the planned $88 million that the Latvian government will put into airBaltic and run a huge risk that it is contravening EU Commission directive on illegal aid, (EU Commision ruling on that last month brought down Estonian Air), the airline should have $63 million in positive equity to finance the CS300’s.
Though I have to say it again and again, it is illegal sate aid, no matter how you look at it, and airBaltic just may not be around too long if the EU Commission sees it that way, but its no different than the Estonian Air situation, state aid had been given over and over to keep these airlines from bankruptcy.
In the end, they brought on board German investor Ralf Dieter Montag-Girmes (ARQ Holdings in Germany), apparently a dubious character from the mid 1990’s when he worked in Russia when the West was financially bailing out Russia through organizations like the Russian Privatization Center and state privatization which created many multi-millionaires and billionaires through massive corruption under then Russian President Yeltsin, and many had their hands in the “robbery of the century”.
As well, Mr. Montag-Grimes was involved with South American Aircraft Leasing (SAAL) to sell AN-148/158’s to South American operators BAe 146 ? because they both had a high wing configuration ?? a crazy idea that did not work off course, anyway a very close individual to the Russian elite, and connected to many of the Russian companies/banks now sanctioned by the West, so an individual of questionable allegiances and scruples.
The Montag-Grimes investment was $57 million for 20% of airBaltic, the Latvians were desperate to keep airBaltic alive, and be able to meet its payment obligations to Bombardier, or risk losing all deposits. His arrival created friction within the government, as then Transport Minister Anrijs Matiss who called Mr. Montag-Girmes the “least bad option” and a “undesirable” investor with “potential security risks”, was fired the next day by the Latvian PM.
The investor was interested in airBaltic, apparently because of Russian sanctions against Russia has reportedly been “brought down to his knees”, as he saw the possibility of selling several SSJ-100’s to the airline, and he is not the only “undesirable” looking to sell Russian airliners to the West, with $2.0 billion earmarked for the SSJ-100 program this year by President Putin, the programs future and the eventual MC-21’s future is at stake, as is Russia’s hope of becoming a major commercial aerospace producer.
The Government of Latvia is playing a game of chicken with the EU Commission on this $88 million aid package, problem is that the EU Commission may investigate airBaltic again for illegal state subsidies, which this year resulted in Estonian Air and Cyprus Airways having to cease operations. State subsidies are not allowed to distort competition, and the EU Commission needs to get on Nordic Aviation in Estonia and airBaltic as soon as possible to investigate, it smells like state subsidies to me, and the risk is the collapse of airBaltic if they get it wrong.
It has come out that the confidential Shareholder’s Agreement between Montag-Girmes and airBaltic calls for the purchase of 5 x SSJ-100’s, and CEO Martin Gauss has confirmed that the Business Plan was recently revised to include another 5 regional aircraft. In fact, it has been reported that the Agreement provides Montag-Girmes has exclusive rights to the supply of aircraft, off course he will if he could, direct the airline to SSJ-100’s and the MC-21 with close relations with IFC (Ilyushin Finance Corporation) highly probable.
This is how things are done, Russian style ! they cannot sell on even terms with western OEM’s so they discount their SSJ100 heavily or offer incredibly low lease rates, compliments of the Russian State, and other forms of incentive that Russians are used to but not the west. In the West, most CEO’s will not compromise their company’s future for a handsome payoff upfront.
The Latvians got not nervous, even CEO Martin Gauss is or should be under suspicion here as he has stated that the SSJ-100s the most cost effective, even though he has led the Bombardier CS300 acquisition and the Q400 acquisition at airBaltic and the Q400 acquisition at Malev (loves the Q400 too much, and it ain’t that good economically just look at ATR-72 sales), where does he sit on all of this ?
Was Gauss hedging, in case he did not get the cash to finance the CS300’s and then in the ‘worst’ case take the SSJ-100 which is being ‘given’ away by the Russians as the OEM has dozens of “white tails” from several failed airlines plus Transaero bankruptcy, UTAir’s financial woes, etc, or is he looking to work with Montag-Girmes and maybe his old boss Hans Rudolf Wohrl of Intro Aviation, which is a big ‘fan’ of the Russian SSJ-100 (his CityJet signed up to lease at great terms 25 Sukhoi’s).
There had been initial distrust of Ralf Dieter Montag-Girmes’ involvement with the airline (discussed above) taking into account his closeness to Russian aerospace and business “elites” in Russia. Worries revolved around whether he might be biased towards Russia so would push for the purchase of jets from Sukhoi, which HE DID, which would then put any additional investment at risk. In return, there were concerns from Karlis Sadurskis, chairman of a parliamentary committee that has been studying AirBaltic, that if the government put an embargo on the purchase of planes from Russia, then Montag-Girmes might withdraw his investment.
The new Agreement will take care of any issues relating to possible Sukhoi’s coming to airBaltic, but how did CEO Martin Gauss change his Business Plan all of a sudden to include SSJ-100’s ? who backed him and what was the ‘real’ motive ? money ? survival of airBaltic ? or his allegiance to those that wish to sell cheap SSJ-100’s into Europe, the Police and Interpol need to keep an eye on all of these individuals from here on.
According to Sadurskis “AirBaltic has altered its business plans and will substitute Sukhoi Superjets (with) Bombardier planes, and all the finances will be covered,” it is alarming how the Russian aerospace industry does business, and another reason to avoid working with Sukhoi, its a mafia of corruption, payoffs to blackmail.
How is CEO Martin Gauss involved should now be investigated, what he knew what he planned what if any money he was to receive.He is the former CEO of bankrupt Malev and DBA which by coincidence was owned then by Hans Rudolf Wohrl of Intro Aviation (Germany) who once owned NFD, Eurowings, LTU, VLM and now Inter Sky and currently owns CityJet (Ireland) which is leasing 25 x SSJ-100’s ? hmmm coincidence ?
At CityJet, Executive Chairman Pat Byrne calls the SSJ-100 a “GAME CHANGER” wow ! is it that good ? if so, why are only Russian airlines buying or leasing them if it’s so good ? It is all BS, Mr. Byrne is a Russian propagandist for Sukhoi, he says he knows so much about the aircraft he could have an PhD on the SSJ-100, well he’s a airline genius, he’s found something 99% of global regional airline executives don’t buy or agree with, in the end beauty is in the eyes of the beholder, some want a reliable, economical and modern airliner some want other ‘benefits’, each his own.
CityJet, is presently operating 18 x Avro RJ85’s, and soon 8 x CRJ900’s for SAS as Intro Aviation is a new SAS partner after having bought out Finland based Blue1 earlier this year, hopefully SAS made sure it wanted CRJ900’s as that is what its other RJ partner Cimber operates, but I am sure Intro Aviation tried to push the SSJ-100.
Anyway, a Russian airliner flying for Air France and KLM is NOT acceptable, and should be barred from using the AF/KL code, I would like to see both airlines to cancel their relationship with CityJet. Has anyone asked the people of the EU, if they want to fly on a Russian airliner ? no ! and they should boycott the airline and the aircraft.
It is not acceptable at this time to be buying a Russian airliner when the Eastern EU members are worried and threatened by Russia’s military actions in Ukraine, Crimea, Transnistria, Abkhazia and South Ossetia, history is repeating itself, it’s like Nazi Germany 1935-1939 all over again, the “unification/liberation” of a people oppressed in foreign land no matter where they live. Like the old saying goes, THOSE WHO DO NOT LEARN HISTORY ARE DOOMED TO REPEAT IT !
How about the fact Intro Aviation sold its Belgian based VLM Airlines a year a ago in a Management Buy-Out (MBO) to its Managing Director Arthur White became majority owner, and immediately wanted 12 xSSJ-100’s ? hmmm, who financed the MBO ? apparently it was a great price, but then the money could have come from Russian ‘backers’ if they could place so many SSJ-100’s, seems very plausible, the Russians are willing to do ALL to sell aircraft.
It actually gets more interesting, as Intro Aviation is one of 3 German firms (4K Invest and Callisto) bidding to buy Adria Airways (Slovenia) which is now being privatized by its government (91.58% ). The airline operates 3 x A319’s, 6 x CRJ900’s, 1 x CRJ700 and 1 x CRJ200, “perfect” for Russian ‘agents’ to place SSJ-100 there !, while Intro Aviation seems like a good fit, it tried a few years back in a failed and cancelled privatization of Adria Airways.
Intro Aviation will have to explain why it ran its InterSky (Austria) (3 x DHC-8-300, 2 x ATR-72-600’s) operation into the ground, could not find a buyer, was to loose its Austrian AOC on November 3, 2015 due to lack of cash and then finally on November 9, 2015 filed for insolvencyin Voralberg with EUR 20 million in debt. The airline was 49.8% owned by Hans Rudolf Wohrl (Owner of Intro Aviation) and Peter Onchen (CEO of Intro Aviation), and it shows it is not always successful at running an airline.
The Slovenian Government has to be careful about who it sells Adria Airways to, the government is thinking of a EUR 8 million injection and recently the airline is growing outside of Slovenia with a successful operation from Tirana, Albania and AOC support and ACMI flying for Nordic Aviation the newly created Estonian national airline, though it will still lose around EUR 5 million in 2015.
The last thing Slovenians want to see is SSJ-100’s in Adria Airways livery, this is what Intro Aviation most likely is eyeing and given the Germans are and were involved in many of the “funny” business in Latvia, from ex-CEO Bertolik Flick to Ralf Dieter Montag-Girmes, the best advise is caution.
Have the airlines considered their political risk in operating SSJ-100’s ? doubt it, because there is a good chance that sanctions will increase on Russia next year as the criminal investigation into the downing of MH17 or at anytime during the next 10-20 years of their operation. A good executive tries to minimize business risk, the SSJ-100 is a high risk proposition by any standard, as NATO and Russia are back to cold war positions.
In the US, I hope that passengers would avoid flying a SSJ-100 of Mexico’s Interjet, as that airline extends its US network, it will rub Americans the wrong way to ask them to fly on the Russian airliner. In Europe we need airlines like Air France and KLM to speak up, and let CityJet know they do not want their customers on a Sukhoi. As well, the consumers can send a strong message by boycotting any SSJ-100 operator and flights, especially when Russia is annexing territories from other countries in the name of mother Russia.
The people of Europe need to send a message to Russia we don’t want your products, we won’t buy them and use them. The people of Europe need to let Air France and KLM know they will not fly on Russian aircraft, shame on KLM for not speaking out already, when almost 200 Dutch citizens were murdered on MH17 last year, sanctions and boycotts is all we have to send a message to Russia, so unite and say Nyet to the SuperJet ! and its Russian cronies.
Lastly, Croatia Airlines is moving towards privatization, but at time only Aegean Airlines (Greece) has shown interest as previously stated Lufthansa has denied its interest, while Turkish Airlines is on the list but it cannot have a majority.
In closing, please do not get caught up in the hype by a few Russian aerospace “lobbyist”, compare the aircraft on even terms, consider life cycle costs (acquisition/lease, operating cost and then resale), then add in lifetime revenue, the numbers will tell the ‘real’ story.
Something cheap up front is not always cheap to operate and think about running an aircraft Made in Russia, support, parts, training and what happens with sanctions ? if they come and you operate the SSJ-100 you can shut your operation down, is it worth the risk ??
Thank you for your understanding, I like to tell things the way I see them, been around, and look this Latvian fiasco with SSJ-100’s and Ralf Dieter Montag-Girmes, when you been around as much I have, you smell BS from a mile.
Till next time, cheers.