Upping the ante with Aeroflot

Published 9:00 pm Tuesday, May 30, 2006

In a move that’s MUCH more interesting than anything you’ll see on the Worldwide Celebrity Poker Tour, Boeing today announced it will spend $18 billion to buy titanium in Russia, while also sinking another $9 billion into engineering services and other contracts related to the International Space Station over the next 30 years. http://www.moscowtimes.ru/stories/2006/06/01/041.html

Key Quote, from Sergei Kravchenko, the president of Boeing’s Russian operation: “‘This is not a reply to Airbus’ $25 billion proposal,’ Kravchenko said. ‘These are concrete plans for cooperation work we already have in Russia.’”

Yeah. Right.

Long-time readers know that Boeing and Airbus are locked into a fight in Russia over a deal with Aeroflot, which intends to order 22 787s or A350s. Early this year, it seemed that Boeing had the deal — which will be worth upwards of $2.5 billion — sewn up.

But as it so often does, politics got involved. First Russian government leaders got upset about the Bush administration’s reluctance to support Russia’s entry into the WTO; then Vice President Dick Cheney made a speech highly critical of the Putin adminstration. http://www.heraldnet.com/blog/blog.cfm?blogid=1&blogdate=2006-05-09+00%3A00%3A00

Airbus, knowning an opening when it sees it, responded by offering to invest some $25 billion into Russia. And that’s the context into which today’s $27 billion offer from Boeing was made.