KIEV, Feb. 26 ??“ Russia and Ukraine are in talks to merge aircraft producing assets in order to create a powerful producer of passenger and cargo planes, Prime Minister Viktor Yanukovych said Monday.

Yanukovych made comments as Antonov An-148, a new Ukrainian-designed regional jet, had received a flight certificate that allows selling the plane throughout the former Soviet Union.

???The world??™s integration processes show that we first have to merge our own companies,??? Yanukovych said. ???The next step, which is being already discussed, is merging the assets with our Russian partners.???

The An-148, one of the most high-profile Ukrainian aircraft projects, is promoted by the government. Antonov Corp. spent an estimated $225 million to design and to test the aircraft before receiving the flight certificate.

The aircraft, which is designed to carry 80 passengers, consumes 30% less fuel compared with similar planes currently in operation. At a price of between $16 million and $18 million apiece it may prove to be a good buy for regional airlines that are concerned with rising costs of jet fuel.

???This is the future of the Ukrainian economy,??? Yanukovych said.

The An-148s are supposed to be manufactured in both, Ukraine and Russia, a plan that would allow Antonov to earn money by selling a license to Voronezh, an aircraft manufacturer in Russia.

Antonov has already secured a contract to build seven An-148s for a regional airline in Kazakhstan, the first of which is expected to be delivered by the end of the year. A number of Russian regional airlines have already secured contracts for purchasing up to 34 planes from Voronezh. There were preliminary orders for another 60 planes, industry analysts said.

Industry specialists estimate the worldwide market for regional jets at about 500 aircraft within the next seven years, including the market of the former Soviet Union at about 170 jets.

The An-148 plane is supposed to replace an aging fleet of popular Soviet-designed regional aircraft, such as Antonov An-24, Tupolev Tu-134, Yakovlev Yak-40 and Yak-42.

But the An-148 aircraft's prospects may be marred by a rival project, the Russian Regional Jet, or RRJ, that is being developed by Russian jet maker Sukhoi in association with Boeing.

Under RRJ, Sukhoi is developing a family of jets seating 60, 75 and 95 passengers, with each expected to cost $26 million.

The first RRJ is expected to make its maiden flight in the first quarter of 2007, which has given the Ukrainian competitor, An-148, a two-year advantage to complete flight tests, obtain an international flight certificate and to secure orders.

Sukhoi plans to sell 800 its regional jets by 2020, most of them abroad, but has yet to land a single firm order. In contrast, Antonov has already secured 50 orders for its An-148 mostly from Russian airlines. (nr/ez)