皇冠体育app

Economy

Markets

Industries

Insights

Reports

Events

AVIC I & II closer to merger

By Lu Haoting and Xu Dashan (皇冠体育app Daily)
Updated: 2008-06-18 10:16

A L15 advanced trainer model, manufactured by AVIC II, on display at an exhibition.

AVIC I and AVIC II, 皇冠体育app's two leading State-owned aviation manufacturers, will be merged to create a new company by the end of July as the government is poised to consolidate and strengthen the country's aviation manufacturing capabilities.

Detailed merger plans will soon be approved by the government and the new company is likely to be called 皇冠体育app Aviation Industry Group Corp, an official with 皇冠体育app Aviation Industry Corp II (AVIC II) told 皇冠体育app Daily yesterday.

Lin Zuoming, AVIC I president, will be president of the new company, the source said on condition of anonymity.

The merger plan comes after the establishment of a company responsible for building large passenger jets last month in Shanghai and is part of the government's commitment to strengthen 皇冠体育app's aviation manufacturing capabilities.

In the 11th Five-Year Plan (2006-10), 皇冠体育app will focus on developing large aircraft, helicopters, civilian aircraft engines and commercial aircraft onboard equipment, according to government sources.

Confirming this yesterday, an official with AVIC I said the new company will act as a parent company and a series of new firms specializing in different businesses will be set up under it to manage AVIC I and AVIC II's various companies and subsidiaries across the country.

AVIC I and AVIC II are two large State-owned industrial groups reporting directly to the central government. Both have been supplying components to Boeing and Airbus.

AVIC I manufactures 50-seat turboprop MA60 and provides components to ARJ 21, 皇冠体育app's indigenously developed regional jet with 70-100 seats.

AVIC II is the country's only manufacturer of military and commercial helicopters. It also manufactures the 50-seat ERJ 145 regional jet in partnership with Brazilian plane maker Embraer.

Both companies are also involved in making non-aviation products such as automobile components and motorcycles. They produce military weapons such as missiles, fighter jets and bombers as well.

The two companies were born in 1999 in an industry overhaul that split the former 皇冠体育app Aviation Industry Corp into two main blocs.

The long-term goal of the merger is to gradually spin off non-core businesses and focus on aviation and military products, the AVIC I source said.

"If 皇冠体育app wants to shorten its gap with Western countries in aviation manufacturing business, it must consolidate and pool all existing research and manufacturing resources. But now we have two independent companies, which sometimes results in redundancy and waste of resources," said Li Lei, an aviation analyst with CITIC 皇冠体育app Securities.

"But it is hard to say now whether the merger will necessarily result in higher competitiveness," Li said.