Izhstal, a steel producer, has filed a bankruptcy petition against Yakovlev, the Russian aircraft manufacturer responsible for the MC-21 and SJ-100 passenger aircraft programs. The Moscow Arbitration Court has accepted the application and scheduled a hearing for January 18, 2027. This development has prompted new questions regarding the financial pressures that exist within Russia’s aircraft manufacturing supply chain.
This development occurs at a critical juncture for the Russian aviation industry, which is currently working to reduce its reliance on foreign suppliers and establish domestic production capabilities for commercial aircraft. Despite Yakovlev’s claims that it has already implemented measures to resolve the outstanding debt, the bankruptcy proceedings underscore the financial challenges that envelop one of the nation’s most strategically significant aerospace manufacturers.
Izhstal Takes Yakovlev to Bankruptcy Court
The Moscow Arbitration Court has received an application from the Public Joint Stock Company Izhstal requesting that Yakovlev be declared insolvent. The court formally initiated proceedings upon accepting the application. On November 2, Yakovlev was informed of the court’s decision.
A hearing regarding the bankruptcy application’s validity has been scheduled for January 18, 2027, by the court. The amount that Izhstal has claimed has not been made public.
Specialist steel manufacturer Izhstal is a member of the Mechel industrial group. Its products include specialized steel varieties that are used in industrial manufacturing and engineering applications.
Yakovlev has acknowledged the legal proceedings in its corporate disclosure, but it has emphasized that it has already taken the necessary steps to repay the outstanding debt. The company has stated that it intends to resolve the financial dispute and fulfill its payment obligations.
It is crucial to note that the court’s approval of the application does not imply that Yakovlev has been declared bankrupt. The January hearing will examine whether the creditor’s application is justified.
Financial Pressure Behind the Aircraft Programmes
The bankruptcy petition comes against a broader background of financial pressure at Yakovlev. The aircraft manufacturer and companies that supply materials, components, and engineering services have been involved in an increasing number of commercial disputes, as previously reported.
Yakovlev was subjected to 363 arbitration claims between 2024 and 2026, which collectively exceeded 21.2 billion roubles, according to an investigation published by The Insider in May 2026. The claimants included major suppliers of titanium, engines, metal products, aircraft components and avionics.
Izhstal was among the companies that had repeatedly pursued legal action against Yakovlev, with 11 cases identified in the investigation. Other noteworthy claimants included the Kyshtym Machine-Building Association (KUMZ), Gidromash, UEC-UMPO, and VSMPO-AVISMA.
The disputes involve contractual obligations, supplies, subcontracting, services, and other commercial transactions. Nevertheless, it would be inaccurate to exclusively attribute all of these claims to the MC-21 and SJ-100 programs. Yakovlev’s production facilities also provide support for military aviation, and many suppliers are involved in both civilian and defense-related manufacturing.
However, the extent of the disputes generates concerns regarding the payment flows in the broader Russian aerospace sector.
Revenue Is Growing, but Profitability Is Under Pressure
Yakovlev’s latest financial figures provide additional context. The company’s revenue increased by 28% year-on-year to 78 billion roubles in the first half of 2026, as indicated by its IFRS results.
Nevertheless, the increased revenue did not result in a more robust operating performance. EBITDA decreased by 45% to 7.98 billion roubles, while operating profit decreased by 64% to 4.3 billion roubles. Additionally, the organization disclosed a net loss of 5.4 billion roubles, which contrasts with a net profit of 2.5 billion roubles in the same period of 2025.
The net debt of Yakovlev increased by 33% to 133.6 billion roubles by the end of June 2026, which is of greater significance.
Losses recognized on aircraft supply contracts under the government’s subsidised leasing investment program were partially responsible for the decline in profitability. The program encompasses 11 Tu-214 aircraft, 34 SJ-100 aircraft, and 18 MC-21 aircraft.
The financial structure of these contracts is crucial due to the fact that the prices at which aircraft are sold under subsidised arrangements and the costs of production do not always align. Yakovlev has been anticipating supplementary government assistance to mitigate the disparity between the cost of aircraft production and their selling prices.
The government reportedly approved an additional 115.3 billion roubles from the National Wealth Fund for the investment program in July 2026, in addition to the 175.4 billion roubles that were originally approved.
These figures illustrate that Yakovlev’s financial difficulties are not limited to a single payment dispute with a steel supplier.
MC-21 and SJ-100 Programmes Face a Critical Period
The financial dispute arrives as Yakovlev prepares for the next stage of Russia’s civilian aircraft development programme.
The MC-21 is intended to become Russia’s principal domestically produced medium-haul passenger aircraft, challenging the Airbus A320neo and Boeing 737 MAX families that have historically dominated the market. Its development has necessitated extensive efforts to replace imported engines, avionics, flight-control systems, and other components.
The SJ-100 programme follows a similar strategy for the regional aircraft segment. The aircraft is being developed with a significant Russian component base as a result of limitations on the availability of Western technologies and equipment.
Both programmes have experienced repeated schedule changes. Sergei Chemezov, the chief executive of Rostec, announced in May 2026 that the MC-21 and SJ-100 would be produced in serial form in 2027. The aircraft are therefore approaching an important transition from development and certification towards commercial production.
In addition to its industrial obligations, Yakovlev is also engaged in the development of the modernized Yak-130M instruction and combat aircraft.
All of these initiatives will necessitate a consistent network of suppliers. The production of aircraft is contingent upon the consistent supply of specialized metals, titanium alloys, engines, landing gear, avionics, and other systems. Suppliers may face challenges as a result of delayed payments, which may impact production schedules at various industrial facilities.
Strategic Enterprise Status Complicates Bankruptcy Proceedings
There is also an important legal distinction in this case. Yakovlev has identified itself as a strategic enterprise that is subject to a unique bankruptcy procedure.
This status means that proceedings are governed by additional legal safeguards and requirements rather than following the ordinary bankruptcy process without modification. The situation is particularly sensitive due to the company’s strategic importance to Russian aviation and defense manufacturing.
However, strategic status does not automatically invalidate a creditor’s claim or mean that court proceedings cannot continue. The Moscow Arbitration Court is currently determining whether Izhstal’s application is legally valid.
Yakovlev’s statement that it has taken measures to repay the debt suggests that the company is seeking to resolve the dispute rather than allow it to escalate further.
In conclusion,
The Izhstal bankruptcy petition exposes financial pressures within Russia’s aerospace supply chain at a critical stage for the MC-21 and SJ-100 programmes. Yakovlev’s financial stability is a significant concern as it prepares for serial production in 2027, despite its assertion that it is addressing the outstanding debt. This is due to the company’s increasing net debt, declining operating profitability, and numerous supplier disputes.