The local aviation industry is covering new ground as each new partnership is signed and completed with large international companies from the field. Further off-set contracts should make local companies more attractive to international players, as IAR Ghimbav, Avioane Craiova and Romaero Baneasa are set to complete their privatization processes this year. Financial analyst Ionel Blanculescu, president of the Consultanta and Investigatii Financiare firm and a former delegate minister in charge of inspection activities in the Nastase government, estimates the value of the industry between EUR one and two billion.
It's a high sum, but the privatizations of local companies still met with difficulties. Usually, when such a process starts, several international companies show their curiosity and buy the task book, but by the time the offer is submitted far fewer – sometimes none at all – retain their interest.
In the case of IAR Ghimbav, only the French-German company Eurocopter submitted an offer for the acquisition of the company; the Americans from Bell Helicopters announced their interest in the local company but did not follow up the talk with action. Last year, IAR Ghimbav had a turnover of about EUR 65 million, 120 percent more than the previous year.
With Avioane Craiova, three companies bought the company's task book – SAAB from Sweden, Ramses Romania and the AGI Group from Great Britain – but it remains to be seen which of them will make acquisition offers. The deadline is the end of February and has been postponed twice: from the end of last October to January and again to February at the behest of the potential investors who cited administrative issues.
For Romaero Baneasa's privatization, several letters of intent were received last year, including ones from Saab and Israel Aircraft Industries.
Romaero Baneasa signed significant contracts last year with companies like Alenia Aeronautica, which will produce parts of the fuselage for the ATR planes. This contract will generate EUR 12 million yearly for the entire life of the program which is a minimum of 10 years, said Paolo Pozzessere, senior vice president of international sales at Alenia Aeronautica.
The Italian company, which is part of Finmecanica Holding, showed interest in the privatizations of both Avioane Craiova and Romaero Baneasa. Pozzessere said that his company was interested in investing further on the local market and will have meetings with Avioane Craiova representatives in this respect, but the company is wary of investing in case a tender is cancelled at the last moment. He complained about the cancellation of the tender his company had won to supply the Romanian military forces with seven medium-sized carrier planes, including initial logistics and maintenance services for the entire life of the plane. The cancellation came after EADS Construcciones Aeronauticas Spain contested the outcome of the bid.
Pozzessere considers the cancellation abusive and says that this might endanger the investment plans the company has in Romania, including the ATR deal.
Aerostar Bacau, one of the local companies from the aviation industry, went through a privatization process a few years ago and now operates both on the military and civil markets as a compound producer as well as repairing, maintaining and modernizing planes. In 2005, it had sales of about EUR 30 million with approximately 34 percent coming from exports. For the current year, Grigore Filip, president and general manager of the company, expects a turnover of about EUR 38 million.
Filip said that privatization had simplified and made the decision-making process more flexible, while the capital increase had helped the company to better and more quickly adapt to market needs. Aerostar is going through a restructuring program that has already concentrated its activities on the civil market as well as the traditional military one. Currently the company is listed on the Stock Exchange and its shareholders include Iarom Bucuresti, with 71.09 percent, and SIF Moldova with 11.21 percent.
Romaero Baneasa has more than $24 million valuable multi-annual contracts for 2007, with companies from Europe, the US and the Middle East, said Dan Vulcan, general manager of the firm. In 2005 the company registered a turnover of roughly EUR 13 million, while the estimate for 2007 is around EUR 21 million. Its current development strategy includes preparation for privatization, targeting large contracts signed in the medium term, as well as a personnel restructuring program which began last year. Romaero also signed a contract with SAAB last year to produce parts for Airbus's new flagship, the A380, which is the world's largest passenger jet. The initial contract is for 10 years and the value of the agreement was estimated at some $5 million over the next five to seven years.