Premium – Sukhoi SSJ-100

The SSJ-100 is a credible aircraft But sales are slow Are UAC and the Russian financial sector collaborating effectively? The SSJ-100 has been in service since 2011. Attractively priced, and even less expensive after the drop in the ruble, one would expect many more of these aircraft to be in service. Sukhoi has not managed to accelerate production much. This is a damper on sales, many of which would be exports and therefore benefit from the good exchange rate. In the following chart, we can see the fleet has primarily been dep[loyed in the CIS. But growing deliveries to Mexico's Interjet have also see fleet growth in Latin America. The much reported (by Russia's state) of deals for 100 in Iran (a dozen ordered by Iran Air so far) and big deals in China have not been forthcoming. These reports have not been encouraging because clearly something isn't working or the deals would come to fruition. Looking at the active fleet, we can see what kind of operators have deployed the SSJ. Russia's Aeroflot is the largest customer. Russia's oil company Gazprom is number two in Russia. There are a number of state operators. Overall though there are essentially three significant operators, the two Russian firms and Interjet. These three operators account for 70% of the active fleet. There are four SSJs listed as parked: one at Sky Aviation in Indonesia, one at Amraviaand Sukhoi itself lists two. These two listed by Sukhoi may be part of the bankrupt Amravia fleet that were not delivered. Since may of these aircraft were ordered byRussian airlines, and a number of these airlines have gone bankrupt, the fleet is somewhat dispersed. Moreover, Sukhoi does not report much information. Sukhoi has 412 orders but the program looks soft since nearly a quarter of these have been delivered. The most recent order came from Iran Air for a dozen firm and 18 options. In the next chart we can see the orders and options through the first quarter 2017. The program does not seem to have the momentum one associates with aircraft programs. It appears that what Sukhoi needs to do is focus on the needs of the many airlines around the world, outside the CIS, that need a low cost and effective 90-seater. The Russian market is economically too unstable to bet on outside of less than a handful of customers. But emerging economies in Asia and Africa are rich with opportunity. We think the same applies in Latin America. The SSJ is not like previous generations of Russian commercial aircraft. It has Western avionics and engines. It has proven itself at Interjet and the recent win at Cityjet is a big endorsement. The SSJ is a credible commercial aircraft in its category and is probably the lowest priced. It is true that the Sukhoi (UAC) sales team faces the unfortunate issue of politics. But even so, airlines want a reliable and cost-efficient solution. The SSJ offers that, despite the Russian political optics. Many countries don't concern themselves with these optics - China, Pakistan, Afghanistan and Iran among them. These countries all could use the SSJ. UAC and the Russian finance sector should be able to offer financially attractive deals to airlines which would boost the SSJ program. So why is this not happening? And if it is, why are there so few orders?

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