Moody's may upgrade Irkut

Moody's Investors Service said it assigned a B1 corporate family rating to Russia's Irkut Corp. and placed the rating under review for possible upgrade.

Based on the imminent reorganization of the Russian aviation industry and the integration of Irkut into UAC (the designated majority state-owned holding company for Russia's aviation activity), the review for possible upgrade reflects Moody's expectation that support by the Russian government will strengthen for Irkut as a result of this initiative.

The review for possible upgrade will focus on the future group structure of UAC and Irkut's position in that group, the degree of expected state support for this combined entity and Irkut in particular and the impact on Irkut's business and financial profile resulting from the integration of other entities into the group.

Moody's said the B1 corporate family rating primarily reflects the strong market position of Irkut's SU-30MK multi-role jet fighter among the Indian, Algerian and Malaysian air forces and increasing exports to other markets but remains constrained primarily by the company's weak position, with its most significant domestic client, the Russian military, exposing it to political risks that can affect business prospects and undermine future revenue potential.

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