Russia set to be biggest buyer at own airshow

MOSCOW Mon Aug 15, 2011 7:01am EDT

MOSCOW (Reuters) - Russia will showcase its top-of-the-range fighter jets and newest space shuttles at the MAKS airshow, starting on Tuesday, and an ambitious program to upgrade its arms looks set to make Moscow the biggest buyer at its own show.

Prime Minister Vladimir Putin is expected to visit the biennial event on Wednesday, and highlights will include the first public flight of Russia's long-delayed, fifth-generation T-50 fighter plane.

State-controlled Russian manufacturers of both military and civil planes are likely to use the event to unveil new orders and joint ventures with industry giants including Boeing, and Russia is expected to dominate buying rather than foreign governments.

Last month President Dmitry Medvedev struck out at Russia's arms industry, the No. 2 exporter in the world, telling his army it could buy weapons from abroad as well as home.

Analysts say that may spark more foreign arms purchases like the 1.2 billion euro ($1.69 billion) order for two Mistral helicopter carriers, sealed with France this year.

"Russia is at a moment where it's looking to beef up its arms industry with new technology. It's looking abroad to do this, which might make Moscow a bigger buyer than a seller at MAKS this year," said Ruslan Pukhov, director of Moscow-based defense think tank CAST.

Russia is in the market to buy up to $3 billion worth of combat and training aircraft during the show, Vedomosti reported earlier this month.

Around $10 billion in deals are expected to be signed at the week-long airshow, according to the show's organizers Aviasalon, cited by Russian media.

The last show in 2009 saw deals of about the same level.

NEW ORDERS

Russia is trying to inject new life into its defense industry, which once competed with U.S. technology but fell into a deep stagnation when research funding was cut after the break up of the Soviet Union.

The T-50 fifth-generation fighter jet, for example, is a belated attempt to rival the long-established F-22 United States aircraft made by Lockheed Martin and Boeing, itself set to be replaced by the F-35 Joint Strike Fighter.

The stealth fighter is the prototype for the aircraft Russia will develop and mass-produce with its top arms importer India in a deal reported to be worth $35 billion.

Russian Helicopters, which makes the series of Mi-branded vehicles such as those used to invade Afghanistan in the 1980s, was formed last year from 11 regional manufacturers.

The company is expected to use MAKS to announce a range of new orders and contracts -- although mostly to Russian firms and the Defense Ministry.

Russia's UTair Aviation and Gazpromavia, the airline of gas monopoly Gazprom, have both agreed to buy the Mi-171 models, the company said.

Russia has also re-emerged as a force on the civil side of the industry, starting deliveries of its first passenger plane since the Soviet era and becoming an ever-growing presence at the world's biggest airshows at Le Bourget, Paris and Farnborough, near London.

The mid-size plane is a collaboration between state-owned Sukhoi and Italy's Finmeccanica. A source close to the joint-venture said it would announce new orders at MAKS, adding to the 170 it has received already.

(Reporting by Thomas Grove and John Bowker; Editing by Alissa de Carbonnel and Louise Ireland)