OREANDA-NEWS. June 24, 2010. Russian Helicopters, in cooperation with Augusta Westland, a subsidiary of the Italian firm Finmeccanica, began construction of a new helicopter plant in the Moscow Region. Investment for EUR40m (USD49.3m) project will be split evenly between Russian and Italian sides, according to Deputy Industry and Trade Minister Denis Manturov, reported the press-centre of OTKRITIE Financial Corporation.

The manufacturing capacity of the plant is for 20 medium-weight civilian AW139 helicopters annually. The first 5 helicopters should be completed in 2011, with the plant reaching peak production capacity in 2015. The new plant will be managed by HeliVert, a joint venture of Russian Helicopters Holding and Augusta Westland.

View: According to plans, by 2016, 40% of components will be made in Russia, with the rest produced in Italy. The venture aims for the share of Russian components to eventually reach parity, according to Deputy Minister Manturov We believe that the assembly of a foreign brand in Russia could sharpen the competition among domestic helicopter manufacturers. Whether such competition will help increase the efficiency of domestic helicopter plants remains to be seen. Russia’s renowned Mil and Kamov research institutes could see serious competition in the domestic market since the new brand was created outside Russia.

Valuation and Action: The news is neutral for publicly traded helicopter plants.