Russia has produced exceptional aircraft. Mikoyan fighters like the MiG-29 have set world records, many of which remain unbroken; Tupolev’s bombers, such as the Blackjack and Backfire, have been acclaimed as among the world’s best. Yet, as aerospace companies the world over are learning, making exceptional planes is no longer enough. The end of the Cold War, the shift in defense priorities away from complex weapons systems, and declining demand for commercial aircraft have thrown the global aerospace industry into turmoil. Nowhere is this turmoil so acute as in Russia.

The breakup of Soviet ministry control has meant the end of the only structure that supported integrated aircraft development and production

Like aerospace companies everywhere, the once mighty Russian industry must respond to shrinking demand and develop new business skills. Unlike others, it must at the same time devise entire management structures to replace the old system of centralized planning. The breakup of Soviet ministry control has meant the end of the only structure that supported the development and production of integrated products and systems. Aircraft design bureaus, independent manufacturing facilities, and other specialized organizations are now struggling to find...