STRATEGY
AND BUSINESS MODEL

Our mission

Develop, manufacture and provide aftermarket services for civil and military aircraft, with a focus on serving the needs of the state in protecting national security; ensure and maintain long-term competitiveness of the Russian aircraft industry on the global scale.

The strategic priorities of the UAC are defined by its majority shareholder—the Russian Federation. In line with Presidential Decree No. 140 “On the United Aircraft Corporation Joint Stock Company” of 20 June 2006, the main areas of UAC’s activities are as follows:
• Preserving and developing the scientific and manufacturing potential of the Russian aircraft industry;
• Ensuring national security and defence capability;
• Concentrating the intellectual, production and financial resources to facilitate the implementation of advanced aircraft programmes;
• Developing, manufacturing, marketing and providing maintenance, aftersales, modernisation, repair and recycling services for military and civil aircraft, upon request of the state and other parties, including foreign customers;
• Introducing new technologies and innovation in aircraft engineering.

The Corporation’s strategy

In 2016 the strategy of PJSC UAC was revised to include the newly-launched aircraft programmes, the changes in the macroeconomic situation and the external environment at large.

In September 20161 the Board of Directors approved the updated PJSC UAC Strategy 2025 and 2035 and the action plan on implementing the Strategy.

The main objectives listed in the Strategy are as follows:
• Serving the needs of the state in the sphere of national security, including transportation security;
• Maximising the sales on the global civil aircraft market in the regional turboprop, narrow-body and wide-body aircraft segments;
• Retaining the military aircraft market share and enhancing the presence in the transport and special-purpose aircraft market segments;
• Maintaining a balanced portfolio, in terms of life-cycle.

OUR STRATEGIC GOALS

The Corporation’s key strategic goal is to become a leader of the aircraft market in terms of value, carving out a distinct position in the global aircraft manufacturing market with a focus on its most attractive segments.

To achieve this goal, the UAC has worked on improving its organisational structure and operating model, developing its product portfolio and improving its aftersales services.

2025 goals


2035 goals


4,5%

Achieving a 4.5% share of the civil aircraft market
Maintaining a civil aircraft market share of at least 4.5%.

45%

Ensuring that civil aircraft account for at least 40% of the revenue
Ensuring that civil aircraft account for at least 45% of the revenue

8%

Achieving a military aircraft global market share of 8%
Ensuring a military aircraft global market share of 8%
1 Minutes No. 166 of 23 September 2016.
Reaching break-even on net profit
Create a profitable business that would be attractive to investors
Reduce reliance on state funding

UAC’s strategic growth areas

Implementing the marketing and product strategy

The Corporation’s main instrument in achieving its strategic goals is implementing its balanced marketing and product strategy that is aimed at carving out and securing a position in every segment of the civil and transport aircraft market while retaining its position as a leading military aircraft manufacturer.

The UAC’s marketing and product strategy rests on the following key principles:
• Addressing the needs of the state in national security, including transportation security, by covering the demand of the federal government agencies in aircraft;
• Maximising the sales on the global civil aircraft market in the regional turboprop, narrow- body and wide-body aircraft segments;
• Maintaining a balanced portfolio, in terms of life-cycle.

Transforming the industrial model

To achieve its strategic goals, in particular to increase the the production of its key products, the UAC has started the structural transformation of its industrial model that is aimed at ensuring an effective upgrade of the Corporation’s production facilities. This involves turning earlier production stages into separate production facilities catering to all of the UAC companies.

The Corporation’s strategic positioning in the value chain is that of a final integrator focusing on the development, manufacturing, testing and certification of aircraft, as well as on aftermarket support and supply chain management.

Implementing the HR strategy

The HR strategy of the UAC supports the implementation of the Corporation’s Strategy as it helps build and effectively manage human resources. The HR strategy is aimed at strengthening the UAC’s employer brand, fostering personal and professional growth of the employees, attracting and retaining highly-qualified personnel (including young professionals) and managing labour efficiency through the creation of a KPI-based employee incentive system.

One of the Corporation’s key objectives before 2025 will be to achieve a fivefold increase in labour productivity by transitioning to a new industrial model and improving employee utilisation.

Implementing the financial strategy

The financial strategy of the UAC is aimed at increasing the Corporation’s operating profit margin, minimising the reliance of its civil programmes on state support, reducing the debt burden, improving business performance and increasing the attractiveness of the business. The system of strategic and financial goals also includes such indicators as revenue, share of civil sales, debt level (debt to EBITDA), EBITDA margin and net profit margin, ROA and ROIC.

Scientific and technological development

The priority areas in terms of laying research and technological groundwork that is essential for ensuring the Corporation’s competitiveness are determined by the latest international aviation, science and technology trends.

At this point, the priority areas for research aimed at achieving science and technology development are as follows:

Civil aircraft
Military aircraft
• Reducing cabin noise;
• Increasing aircraft electrification, in particular through the use of alternative high-capacity energy generation sources; on-board energy flow management;
• Mitigating the environmental impact;
• Exploring non-traditional aerodynamic designs of wing-to-fuselage integration.
• Improving the aerodynamic characteristics of aircraft;
• Developing stealth technologies;
• Using new materials;
• Increasing aircraft electrification;
• Increasing the strength of the airframe construction elements, in particular by managing the load through the use of passive and active systems to control the deformation of the lifting surface.

In addition, research is underway on various advanced dual-use technologies.

Business model

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INVESTMENT PROGRAMME

Structure
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