Managers are getting the chop in Russia’s war economy, too.
The country’s largest military aviation contractor has plans to boost fighter jet production by 30% in five years, as its CEO said in the same month that he wants to lay off 1,500 management staff.
“We plan to raise production effectiveness 30% by 2030,” Vadim Badekha, CEO of the United Aircraft Corporation, told state media in a Wednesday report. “It will help produce major volumes under the arms procurement order that will exceed the high figures of last year.”
The United Aircraft Corporation, which has no relation to United Airlines, is the Russian defense prime that oversees Sukhoi and Mikoyan — the producers of warplanes such as the MiG-35 and the fifth-generation Su-57 multirole fighter.
Badekha, who took over UAC in November, made his remarks a week after telling Russian media outlet RBC in an interview that his company was looking to “optimize the number of managerial personnel” in its ranks.
“1,500 people, or more than a quarter of the managerial staff,” Badekha said, adding that the layoffs were targeted at its Moscow office. It’s almost reminiscent of the “Great Flattening” unfolding in the US labor market now, where Big Tech and some of America’s largest firms have been ripping out chunks of middle management to go lighter on salaries and efficiency.
But UAC’s financial condition is far more dire. Badekha said the cuts were part of a push to bring UAC out of the red, after a decade of the firm posting consecutive annual losses of 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.
Still, that was a meeting about civil aviation; UAC 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 surged defense spending for the last three years to maintain its offensive pace in Ukraine.
But Russian contractors such as UAC have also been contending with sanctions choking out their supply chains, skyrocketing interest rates meant to keep inflation in check, and an ailing labor market that’s seen workers leave the country or sign up to fight Ukraine.
UAC’s press team did not respond to a request for comment sent outside regular business hours by Business Insider.