Eads targets Russian jet maker

EUROPEAN aerospace colossus Eads is in talks to take a strategic stake in Russia's Irkut, co-manufacturer of the Sukhoi 30 fighter plane.

In a deal that would mark a further reduction in European cold war enmity, Eads is aiming to win a stake in the burgeoning export market for Sukhoi's top multi-role combat aircraft, and its sister the Sukhoi 27 Flanker.

Sukhoi aircraft, Russia's most valuable arms export, have gained a fearsome reputation. Indian Air Force pilots flying Sukhoi 30s thrashed an American Air Force team flying Boeing F15 Eagle fighters in combat exercises earlier this year.

Eads is also interested in Irkut's Beriev 200 amphibious firefighting plane and its plans for a new generation of Russian airliners.

Spokesman Rainer Ohler confirmed the two companies were in talks but could not say whether the 10% stake mentioned by industry sources was correct.

'We are interested in taking stakes in Russian companies, including Irkut,' he said. 'We want to help the consolidation of the Russian aerospace industry.'

One source said Eads might wait to buy its stake until Moscow-listed Irkut had also achieved a listing in London or New York.

Irkut yesterday reported 2003 net profits of $1.8m (£1m) on sales of $522m, with operating profits of $75m.

Eads already works with State-controlled designer Sukhoi on the development of next-generation fighter planes under a co-operation agreement. Tying with Irkut, the only major Russian aerospace company that is not State-controlled, would give Eads - which makes Tornado and Typhoon fighters for the British and German air forces - further access to Russian fighter technology.

Such a deal would also open wider the door to the Russian civil aviation market. With a population of 145m in 10 time zones, and poor roads and railways, Russia promises to become a huge market for airliners.

Eads' civil jets arm Airbus, in which BAE Systems has a 20% stake, already counts several Russian carriers among its customers. Irkut has a contract to supply £10m of components a year to Airbus, rising to £40m in the next few years.

Despite its modest turnover, Irkut is a substantial business with 22,000 employees. The order book soared by $1bn to $4.5bn last year, and includes a $1.8bn order from India for 40 SU 30s, a $900m purchase of 18 of them by Malaysia and an order from Vietnam for six Su 27s.