07MOSCOW2553, BOEING RUSSIA: CHILLING THE BUBBLY FOR THE “BIG”

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Reference ID Created Released Classification Origin
07MOSCOW2553 2007-05-31 12:23 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXYZ0000
OO RUEHWEB

DE RUEHMO #2553 1511223
ZNY CCCCC ZZH
O 311223Z MAY 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0748
RUCPDOC/USDOC WASHDC IMMEDIATE
RULSDMK/DEPT OF TRANSPORTATION WASHDC IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE

C O N F I D E N T I A L MOSCOW 002553 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EEB BYERLY AND COLEMAN 
EUR/RUS FOR WARLICK AND HOLMAN 
USDOT FOR STREET AND HATLEY 
USDOC FOR 4321/ITA/MAC/EUR/RISA BROUGHER AND BEADLE 
USDOC FOR 3004/CS/ADVOCACY/BLOOM 
 
E.O. 12958: DECL: 05/31/2017 
TAGS: EAIR ECON PREL RS
SUBJECT: BOEING RUSSIA: CHILLING THE BUBBLY FOR THE "BIG" 
DEAL? 
 
 
Classified By: Econ MC Quanrud for reasons 1.4 B and D. 
 
1. (C) Boeing Russia and Economics Minister Gref confirmed to 
us that preparations are underway for three contracts to be 
signed on June 9 on the margins of the St. Petersburg 
Economic Forum.  The contracts include the $4 billion sale of 
22 787 Dreamliners to Aeroflot, an "enhanced role" for Boeing 
in the development and after-sales support of the Sukhoi 
SuperJet100, and a general partnership agreement between 
Boeing and the United Aircraft Corporation (UAC).  While we 
hope this is as solid as it appears, we also know the 
contracts have not be finalized.  If the Aeroflot deal goes 
through, Russia will be the single largest destination for 
the new 787 Dreamliner with a total of 37 sold (including 15 
sold to S7 Airlines May 29). 
 
2. (C) The Dreamliner sale to Aeroflot has been dubbed "the 
longest sale in Boeing history."  The process began in August 
2005, when Aeroflot announced its intention to modernize its 
wide-body fleet with either 22 787s or 22 Airbus A350s. 
While the obvious commercial choice has always been the 787 
for its earlier delivery dates and better fuel economy, the 
decision has been a pawn in a larger chess game of Russia-EU 
and Russia-U.S. relations.  A year into the process, the 
Kremlin tied the sale to proposed cooperation with Russia's 
aircraft-manufacturing conglomerate UAC.  Over the last six 
months, UAC has slowly been moving towards the view that both 
aircraft giants could bring different strengths to the table. 
 This appears to be triggering a GOR decision to purchase 22 
aircraft from each company.  Minister Gref told Ambassador 
and visiting CODEL Lott May 30 that the St. Petersburg 
Economic Forum would feature a Boeing signing ceremony.  He 
added that Boeing had played its cards right and that he 
appreciated Boeing's commitment and positive attitude towards 
Russia, even in the midst of GOR "emotional outbursts" 
against foreign aircraft companies.  Gref said Boeing's 
presence in Russia was "more robust" than that of Airbus and 
that ongoing cooperation with UAC on the SuperJet100 and the 
SuperSonic Business Jet was welcome. 
 
3. (C) Comment: This has been a good week for Boeing in 
Russia.  The news of the Aeroflot deal comes on the heels of 
a  May 29th announcement of the sale of 15 Dreamliners (worth 
approximately $2.4 billion) with an option to purchase 10 
more to S7 Airlines (formerly known as Sibir).  If the 
Aeroflot deal goes through, Russia will be the single largest 
destination for the new 787 Dreamliner, with 37 sold to date. 
 (Even U.S. carriers have yet to purchase that quantity.) 
Should it come to fruition in ten days, the back-story is 
extra sweet since the Dreamliner and Russia are a nice fit. 
Much of the plane's advanced features were designed at 
Boeing's Moscow Design Center and most of the cutting-edge 
titanium components will be machined by VSMPO-Avisma.  End 
comment. 
BURNS

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