07MOSCOW1145, AEROFLOT-BOEING DEAL – “FROZEN” NOT DEAD

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Reference ID Created Released Classification Origin
07MOSCOW1145 2007-03-16 14:26 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO7710
OO RUEHAG RUEHROV
DE RUEHMO #1145 0751426
ZNY CCCCC ZZH
O 161426Z MAR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8322
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L MOSCOW 001145 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/RUS WARLICK AND HOLMAN 
STATE FOR EB/TRA BYERLY AND COLEMAN 
USDOC FOR 4321/ITA/MAC/EUR/RISA BROUGHER AND BEADLE 
USDOC FOR 3004/CS/ADVOCACY/BLOOM 
NSC FOR KLECHESKI AND MCKIBBEN 
 
E.O. 12958: DECL: 03/16/2017 
TAGS: ECON EAIR PREL RS
SUBJECT: AEROFLOT-BOEING DEAL - "FROZEN" NOT DEAD 
 
 
Classified By: Ambassador William J. Burns by reason 1.5 b,d 
 
1. (SBU) Summary. Despite reports that Aeroflot will sign a 
deal for 22 A350's with Airbus in the next few weeks, the 
Boeing deal with Aeroflot is not off the table.  If anything, 
this week's visit by Boeing CEO for Civil Aircraft Scott 
Carson appears to have improved the chances for a Boeing 787 
deal by summer, making our continued advocacy all the more 
important.  End Summary. 
 
2. (SBU) Aeroflot CEO Valeriy Okulov's March 15 press 
conference was intended to announce the introduction of 
e-tickets by Aeroflot, but most of the coverage in the 
intervening 24 hours has focused on questions Okulov took 
from Reuters and AP, who asked if Aeroflot was going to buy 
planes from Airbus. Okulov replied that, "Our documents for 
buying the Airbuses are in a fairly high state of readiness. 
The deal will be done in the next few weeks. Yes, we're 
signing for 22, and it's a firm contract. The contract for 
the 787's is frozen. It's hard to say how deep that freeze 
is." 
 
3. (C) We spoke with Boeing's Moscow office, and in light of 
conversations with the GOR, they do not believe it was 
Okulov's intention to announce the award of the 22 wide-body 
jet contract to Airbus, or to imply that Boeing is no longer 
in contention.  No action has been taken to terminate the 
contract negotiations with Boeing, nor has Aeroflot asked 
Boeing to return its refundable deposit.  Okulov continues to 
tell Boeing that he wants their planes, and made a similar 
point to Ambassador March 15.  After the press conference, 
Boeing also reached out to Sukhoy CEO Mikhail Pogosyan and 
UAC CEO Aleksey Fedorov who are traveling with Putin in 
Europe. Both expressed surprise at Okulov's comments and 
assured Boeing that its deal was not dead. 
 
4. (SBU) Airbus CEO Louis Gallois is expected to arrive in 
Moscow on the 25th or 26th of March. Okulov's comments 
suggest that during that visit, Aeroflot will sign some sort 
of agreement for A350's, with a delivery date of 2015. Okulov 
previously told Boeing he's "not allowed" to walk away from 
Airbus and fully expects there to be some sort of a split 
deal arrangement. 
 
5. (C) Boeing also told us that Boeing CEO for Civil Aircraft 
Scott Carson's visit to Moscow March 11-13 engendered a lot 
of good will, especially with United Aircraft Company General 
Director Fedorov. (Carson told Ambassador that he felt "quite 
positive" about his conversations here this week.) The latter 
has invited Carson to return to Moscow in May prior to the 
first UAC board meeting, during which UAC's structure and 
partnerships will be discussed.  Fedorov also arranged for 
Carson to meet with Finance Minister Kudrin during his visit. 
 Fedorov told Carson that Kudrin is also involved in 
aviation-related decisions, and personally pushed for VTB's 
purchase of its five percent EADs share. 
 
6. (C) Comment. Boeing Moscow believes that Carson's visit 
increased the possibility of making a 787 sale before summer. 
 The politics of the situation may mean Okulov has to sign a 
deal with Airbus first, before he will be allowed to sign 
with his preferred manufacturer, Boeing.  This deal is not 
dead (at least not yet), even should the Airbus deal be 
announced in the next few weeks. 
BURNS

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