““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
Sukhoi Business Jet
Launched with much fanfare two years ago, this executive version of a Russian regional airliner may have a hard time gaining market acceptance.
For those of us who follow airplanes, the Sukhoi name implies advanced design, speed and durability. The list of models cranked out by Russia’s Sukhoi Design Bureau is long and distinguished. It includes the Mach 2.3 Su-27 Flanker fighter/interceptor, which climbs at an astonishing 54,000 feet per minute and ranks among the best military aircraft ever made, even by contemporary standards.
For more than 70 years, Sukhoi has been home to some of the world’s most brilliant aerodynamicists. When the late Gulfstream CEO Allen Paulson first envisioned a supersonic business jet for his company in the late 1980s, after the collapse of the Soviet Bloc, he partnered with Sukhoi on the design. The result was the stunning S-21, a sexily swept, 10-passenger, Mach 2 model with a range of 4,600 nautical miles. Because of the costs involved, the airplane was never built; but the design showed what was possible. It fueled a supersonic ambition that Paulson carried to his grave and it reminded everyone that, although the Soviet Union was history, Sukhoi was not.
Paulson wasn’t the only one to see the value of applying Sukhoi’s expertise to the commercial market. Finmeccanica, the Italian aerospace, defense and industrial conglomerate, bought a quarter share of the Sukhoi Civil Aircraft Company. Finmeccanica’s portfolio of businesses includes AgustaWestland helicopters and Alenia, which builds fighter jets and aerostructures. Alenia and Sukhoi formed a joint venture to design and manufacture the SuperJet, a 78- to 98-seat regional airliner for which Boeing provided marketing and technical assistance.
Sukhoi began the program in 2000, with Boeing joining in 2002 and Alenia in 2007. Also, the Russian government contributed 7.9 billion rubles ($245 million) for research and development. From the outset, the project was plagued by delays, brought on in part by the participants’ technological ambitions, a complex international supply chain and large capital requirements.
The optimized fuselage is wider (127 inches) and taller (83.5 inches) than anything else in its class, and Sukhoi promised better fuel economy to boot. The computerized, fly-by-wire controls are state-of-the-art. French avionics maker Thales designed the modular, open-architecture glass cockpit with all the latest safety features. The easy-to-maintain SaM146 engines, packing 16,100 pounds of thrust each, were developed by a joint venture between Russia’s Saturn and France’s Snecma, the company that developed the ubiquitous CFM56 engines for the Boeing 737 with General Electric. Among other well-known Western suppliers on the aircraft are Liebherr (environmental controls), Messier Dowty (landing gear), Zodiac (fuel system), B/E (interior), Honeywell (auxiliary power unit), Parker (hydraulics), Hamilton Sundstrand (electrical) and Goodrich (wheels and brakes). Alenia’s duties include worldwide product support and running most of the sales and marketing through the SuperJet International subsidiary in Italy.
The SuperJet did not take to the skies until 2008, in part due to development problems with the engine, and it did not gain certification until 2011. Almost immediately thereafter, the manufacturer hatched plans for a VIP version of the long-range derivative (SSJ100-LR), branded the Sukhoi Business Jet (SBJ), with 7,900 pounds of added weight, auxiliary fuel tanks and an increased range of 4,250 nautical miles at speeds near Mach 0.78 (516 mph) with a two-man crew and eight passengers. The service ceiling is 40,000 feet and, like most other aircraft in this class, the SBJ is somewhat porcine; at its maximum takeoff weight of 109,000 pounds, it requires 6,720 feet of runway.
Available VIP configurations of the aircraft—which the manufacturer could begin delivering as early as next year—provide seating for 13 to 38 passengers. This airplane has a lot of interior real estate—the nearly 68-foot-long cabin offers 714 square feet of floor space. All that room means the layout can offer three lavatories, a large galley, a bar, a forward lounge, a conference room, an executive office and a private bedroom.
All new aircraft have teething problems, but the SuperJet has had more than its share. The first 10 were delivered to the Russian airline Aeroflot and were able to log only two to four hours of service a day. SuperJet systems with problems included fuel, control surfaces, landing gear and software that generated the need for some redesign and in-field modifications of existing aircraft.
All 10 of Aeroflot’s first airplanes are being replaced with improved, later-serial-number models. Initial aircraft were sold at fire-sale prices that were substantially below production costs, generating losses at both SCAC and engine-maker Saturn, according to a 2012 study by Russia’s General Account Office. The losses were offset in part by a multi-year, $1 billion line of credit from Russia’s VEB development bank and by restructuring SCAC’s credit portfolio with shareholders announced in late 2011.
Then came the crash. On May 9, 2012, a SuperJet crashed in the mountains near Jakarta, Indonesia during a demonstration flight, killing all 45 aboard, including government officials, airline executives and members of the media. Besides being a human tragedy, it was a public relations disaster that eroded confidence in the airplane and stalled sales.
Months later Indonesian investigators faulted both the pilots and air traffic controllers, concluding that the crash’s causes included the pilots’ distraction during flight and their intentional disengagement of the terrain-awareness-warning system as well as the controllers’ failure to establish minimum safe altitudes for aircraft transiting the area. The airplane was exonerated.
Before the crash, SuperJet International had predicted sales of 100 SBJs over its first 20 years. This year the company revised its projection down to 80 sales over the same period, but even that may be overly optimistic. Executive aircraft in this category, which include the Embraer Lineage, are positioned in a niche between larger models from Boeing and Airbus and smaller, faster ones from Gulfstream and Bombardier, and simply have not developed much market traction.
However, savvy buyers who value cabin size should certainly put the SBJ on their shortlists. Sales of SuperJets are increasing to the airlines and production is ramping up. The Russians aren’t coming yet—but maybe soon.
SUKHOI BUSINESS JET AT A GLANCE
Price (typically equipped):$50–$55 million
Cruising speed: Mach 0.78
Range: 4,250 nm*
Takeoff distance at MTOW: 6,732 ft
Cabin: Height: 6 ft, 11 in; Width: 10 ft, 7 in; Length: 67 ft, 11 in; Volume: 4,192 ft
*two crew, eight passengers, NBAA IFR; Source: Sukhoi
Mark Huber welcomes comments and suggestions at email@example.com.
What our readers had to say
It's a pleasure to see a beautiful bizjet come out of Russia [New Jet Preview: "Sukhoi Business Jet," October/November 2013]. Bravo to Russian aviation progress!