UAC Announces Merger with Sukhoi, MiG

Russia’s United Aircraft Corporation (UAC) announced today that it had merged with the Sukhoi aircraft manufacturer and the MiG aerospace firm.

UAC Board of Directors approved the merger of the three companies on November 30. The issue of reorganizing UAC in the form of joining Sukhoi and MiG to it has been submitted to an extraordinary general meeting of UAC shareholders, scheduled for January 2022. The current management of the Sukhoi and MiG companies was centralized earlier: the functions of the sole executive body of MiG were transferred to Sukhoi, and the functions of the Sukhoi were transferred to UAC.

“The upcoming merger is the most important event for the aviation industry. Preparations have been carried out, details have been worked out in order to start forming a united subject of the Russian aircraft industry - a structure capable of giving a powerful impetus to the development of the Rostec aviation complex and the entire industry. In a single structure, the best corporate governance practices, advanced engineering competencies, and a developed and effective production base should be collected. We are laying the foundation for the future aircraft industry in Russia,” said UAC General Director Yuri Slyusar.

In addition to performing the functions of the Group's corporate center, UAC will become an operating company, will directly manage production sites and design bureaus, implement aviation programs and develop advanced technology. Thus, a start has been made for the transition from a 3-tier to a 2-tier corporate structure of the UAC.

Both merged companies are among the leaders in the global aircraft industry, providing a full cycle of work - from aircraft design and production to after-sales service and aircraft modernization. Sukhoi and MiG already have experience of joint fruitful work in the interests of ensuring the country's security and defense capability.

The Sukhoi company is a successful and profitable manufacturer of world famous Su aircraft, according to the results of 2020 the company received 140 billion rubles in revenue (46% higher than in 2019) and a net profit of 5.6 billion rubles (26% higher than the level of 2019).

RSK MiG is also a historically strong and well-known manufacturer of MiG aircraft; in 2020, the company's revenue amounted to 70 billion rubles, exceeding the level of 2019 by 19%.

Reducing management levels and simplifying the corporate structure of the UAC will eliminate duplicate administrative functions and reduce general business costs. At the same time, it is planned to develop general corporate centers of competence and service, expand cooperation of production sites for a more efficient implementation of aircraft building programs. Along with other measures, this should ensure an increase in the financial stability and investment attractiveness of the UAC as a whole. 

Consolidation and centralization of management is also taking place in other areas of the UAC's activities. So, in November, the accession to PJSC "IL" of the Voronezh aircraft plant VASO, the Ulyanovsk enterprise "Aviastar-SP" and the Moscow Region EMZ named after V.I. Myasishchev. The powers of the EIO in relation to PJSC Il itself were transferred to PJSC UAC. UAC also has such powers in relation to PJSC Tupolev, which includes, in addition to the eponymous design bureau in Moscow, the Kazan Aviation Plant named after V.I. S.P. Gorbunov.