SYRIAN AIR TO LEASE RUSSIAN-MADE AIRCRAFT

C O N F I D E N T I A L DAMASCUS 000628

SIPDIS

DEPT FOR NEA/ELA, NEA/FOR, NEA/EX, EEB/ESC/TFS, L/EB;
COMMERCE FOR BIS/SONDERMAN/CHRISTINO
NSC FOR SHAPIRO/MCDERMOTT
TREASURY FOR HIJJAR/CURTIN
PARIS FOR NOBLES
LONDON FOR LORD

E.O. 12958: DECL: 08/27/2019
TAGS: EAIR ECON EINV ETTC PGOV PREL SY
SUBJECT: SYRIAN AIR TO LEASE RUSSIAN-MADE AIRCRAFT

Classified By: Charge d'Affaires Chuck Hunter for reasons 1.4(b,d)

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Summary
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1. (SBU) The semi-independent daily newspaper al-Watan
reported August 25 that Syrian Air has completed the legal
and technical negotiations for the lease, with the option to
buy, of two TU 204 aircraft to be delivered in early May

2010. Due to Syrian Air,s inability to procure new Airbus or
Boeing aircraft as a result of U.S. sanctions, the airline is
looking to Moscow and Tupolev aircraft as an alternate source
of supply. The delegation will submit its recommendations to
the Ministry of Transport for final decision. End summary.

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Syrian Air to Purchase Tupolev Aircraft?
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2. (SBU) Local media reported that a delegation from the
Ministry of Transport and Syrian Air went to Moscow on August
19 to resume negotiations on the leasing or purchasing of TU
204 and TU 214 Russian aircraft. According to al-Watan,
Director General of Syrian Air Ghaida Abdullatif announced on
August 24 that legal and technical negotiations had been
completed for leasing, with an option to buy, two TU 204
aircraft, to be delivered in early May 2010. The delegation
will submit its recommendations to the Ministry of Transport
for final decision. Al-Watan reported the two TU 204
airplanes are new, have advanced navigation equipment to
comply with EU requirements, and are configured to
accommodate 164 economy-class and 12 business-class
passengers.

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"There Are Alternatives"
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3. (SBU) Syrian Air had signed an MOU with Airbus for the
purchase of 14 airplanes with different capabilities. Under
the MOU signed with Syrian Air, Airbus was to obtain the
necessary U.S. export licenses. Since Airbus thus far has
been unable to obtain these licenses Syrian Air decided to
pursue the Russian option. (Note: It is Post,s understanding
that the SARG was notified by Airbus of the receipt of
Commerce,s Intent to Deny letter. Airbus and the SARG,
however, are awaiting the final response from Commerce to
Airbus, rebuttal of that letter. End Note.) An unnamed
source at Syrian Air was quoted by al-Watan as saying the
airline "would not wait forever" for the export licenses and
would not allow the licenses to become a "bargaining chip" -
if the U.S. refuses to issue the licenses, "there are
alternatives," the source said.

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Russian Planes Not Option for Charter Air - Yet
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4. (C) An Embassy source familiar with aviation issues in
Syria, Kamal Abou-Shaar (strictly protect),was unsurprised
by news of the pending lease of Russian aircraft by Syrian
Air. He assessed that the dilapidated state of the airline,s
current fleet required drastic action on their part in order
to survive. Abou-Shaar, however, said the logistics and
maintenance issues arising from the addition of two Russian
aircraft to a fleet of Airbus and Boeing planes could cause
some unexpected complications for Syrian Air. In addition to
having to establish a new logistics supply-chain to Russian
suppliers for both repair parts and ground-support equipment,
there would be tremendous staffing issues - qualified pilots,
maintenance personnel, ground support staff - which will also
need to be addressed.


5. (C) Abou-Shaar opined that, while Syrian Air is probably a
big enough organization to overcome these obstacles, charter
airlines or upstart airlines would be unlikely to follow suit
until Syrian Air had successfully integrated these planes
into their fleet and established fully functional maintenance
and logistics support operations that could be contracted by
other airlines. Although the two TU 204 planes are reported
to have advanced navigation equipment to comply with EU
requirements, Abou-Shaar questioned whether the planes were
really certified to fly to EU countries. He speculated that
Syrian Air would use them only to fly internal or regional
routes.


6. (C) Comment: The lease of only two Russian aircraft by
Syrian Air appears to be a stop-gap measure taken to address
an immediate need for air-worthy aircraft. The funding source
for the lease/purchase of these two planes is currently
unknown. The SARG and Syrian Air appear still to be hopeful
that a future lessening of sanctions will open the way for
them to purchase replacement aircraft from Western
manufacturers. End Comment.
HUNTER