* Russian civil aviation firms hit hard by economic crisis
* Military aircraft orders faring much better
* Biennial MAKS air show is Russia's biggest
By Gleb Stolyarov
ZHUKOVSKY, Russia, Aug 25 (Reuters) - Russian civil aviation
companies face a disappointing week at the country's largest air
show that opened on Tuesday as economic crisis and Western
sanctions take a heavy toll on order books and scare away many
foreign firms.
By contrast, demand for Russian military aircraft is booming
and the biennial MAKS air show is increasingly being used to
showcase the country's military might. According to Russian
media, Russia and Iran will sign a $1 billion deal during the
three-day show for S-300 missiles.
Two years ago -- just before the Ukraine crisis plunged
relations between Russia and the West to their worst level since
the Cold War -- the MAKS air show generated some $21 billion in
deals, a figure civil aviation firms can only dream of today.
"The reasons why the number of deals is falling is very
simple - the Russian aviation market is shrinking because of a
steep rouble devaluation as people's purchasing power declines
and they travel less abroad," said Andrei Rozhkov,
infrastructure analyst from Metropol brokerage.
"Russian companies have not only stopped purchasing new
planes, they are postponing delivery under old contracts."
A collapse in global oil prices has led to a steep rouble
devaluation that has forced Russians to tighten their belts and
cut down on non-essential spending, including foreign travel
which has fallen by about 40 percent this year.
President Vladimir Putin shrugged off such concerns at
Tuesday's opening ceremony, saying: "I'm convinced that,
regardless of the current political environment, MAKS will serve
- as before - as an efficient platform for experts' discussions,
development of industrial cooperation and finding new partners".
However, state-owned United Aircraft Corporation (UAC),
which has consolidated most Russian private aircraft builders
over the past decade, is now subject to European Union sanctions
-- imposed over Moscow's role in the Ukraine crisis -- and this
means it can no longer raise long-term debt on global markets.
CONTRACTS
On Tuesday UAC signed a deal to supply 32 Sukhoi Superjet
100 aircraft for the Russian State Transport Leasing Company,
effectively rubber-stamping a contract announced last year and
financed with a Russian state loan. The deal's value has been
previously estimated at $1.1 billion.
Aircraft builder Irkut IRKT.MM , which is also part of UAC
and is developing the short- and medium-range jet MC-21, could
also sign a deal to deliver 20 planes to the leasing unit of
state bank Sberbank SBER.MM , according to industry sources.
A spokeswoman for Irkut said contracts were possible but
declined further comments.
Back in 2013, UAC signed deals to deliver as many as 96
Superjets and 82 MC-21 planes worth a total of $9 billion.
Several Russian leasing companies also signed deals to buy as
many as 100 Bombardier Q400 NextGen worth $3.4 billion.
Following Russia's annexation of Ukraine's Crimea region and
the imposition of Western sanctions, however, hopes for large
exports of Russian makes such as the Superjets have faded, with
Moscow struggling to provide financing to prospective buyers.
The number of participants and exhibits will probably shrink
this year, too. More than 1,000 companies attended MAKS 2013,
which exhibited 287 foreign pieces of hardware from 44
countries, including 49 aircraft.
This year, Japanese Yokohama Rubber Company 5101.T is the
only official foreign sponsor of the show.
"Boeing (NYSE:BA), Airbus, Siemens - they are all participating again
but of course in a rather reduced format," said one UAC source.
On Tuesday, Airbus was the only foreign company exhibiting
its A350 model at the show, which was otherwise dominated by
military equipment.
Putin said recently Russia is the world's second biggest
supplier of weapons after the United States, with a global
market share of 27 percent and annual deals worth $14 billion.
As well as the Iranian deal -- which follows the signing of
a landmark deal last month between Tehran and world powers
including Russia that aims to curb Iran's nuclear programme --
UAC may also agree this week to deliver 50 SU-35 fighters jets
to the Russian Defence Ministry.
"In the past two years the Russian army has received around
300 military aircraft as part of rising state purchases," said
Konstantin Makiyenko, deputy director of the Moscow-based Center
for Strategies and Technologies Analysis.
But he added that state purchases would soon begin to
decline because the fleet of aircraft had been well renovated
and the state budget is now suffering from low oil prices.
(Writing by Dmitry Zhdannikov; Editing by Gareth Jones)