The largest Russian military aviation contractor is gearing up to increase fighter jet production by 30% over the next five years. This announcement comes from CEO Vadim Badekha, who also mentioned plans to lay off 1,500 management staff this month. "We aim to enhance our production efficiency by 30% by 2030," Badekha shared with state media in a report on Wednesday. "This will enable us to meet the significant demands of the arms procurement order, surpassing last year's impressive figures."
The United Aircraft Corporation, which is not affiliated with United Airlines, is the leading defense contractor in Russia, overseeing manufacturers such as Sukhoi and Mikoyan, known for warplanes like the MiG-35 and the advanced Su-57 multirole fighter.
Badekha, who stepped into the role of UAC head in November, made these comments just a week after revealing to Russian media outlet RBC that the company is looking to "streamline the number of managerial personnel" within its ranks.
"1,500 individuals—over a quarter of our management team," Badekha noted, specifying that the layoffs would primarily affect the Moscow office. This situation bears a striking resemblance to the "Great Flattening" occurring in the US job market, where major tech companies and other large firms are reducing their middle management to cut costs and improve efficiency.
However, UAC's financial situation is much more critical. Badekha explained that these layoffs are part of a strategy to pull UAC out of the red, following a decade of consecutive annual losses amounting to billions of rubles.
The company’s net loss was 34.8 billion rubles in 2023, which shrank to 14.2 billion rubles in 2024.
Meanwhile, the firm is trying to accelerate deliveries. Badekha has been touting his goal of 30% increased productivity since at least March, when he met publicly with Russia's Prime Minister, Mikhail Mishustin. That meeting, however, focused on civil aviation; UAC also builds civilian airliners like the Yakovlev Superjet 100 and Irkut MC-21.
The Wednesday state media report, citing Badekha, on the other hand, was about a delivery of upgraded fourth-generation Su-34S fighters, indicating that the group hopes its production boost will extend to its arms business too.
UAC's attempt at profitability comes as the Russian government has increased defense spending over the last three years to maintain its offensive pace in Ukraine.
But Russian contractors such as UAC have also been contending with sanctions choking their supply chains, skyrocketing interest rates meant to keep inflation in check, and an ailing labor market that has seen workers leave the country or sign up to fight in Ukraine.