More than eight years after splitting state aerospace giant Aviation Industries of China (AVIC) into two mammoth holding companies, China is considering merging at least some of their subsidiaries in a move linked in part to the country's aim to develop large commercial aircraft.
Rumours have been circulating for weeks that the government may re-combine China Aviation Industry Corp I (AVIC I) and China Aviation Industry Corp II (AVIC II) and state-run media now confirm that discussions are indeed taking place.
The official Xinhua news agency calls the talks "only exploratory" but says a detailed consolidation plan is expected to be unveiled later this year.
"To enhance the manufacturing capability of the aviation industry, AVIC I and AVIC II will probably undertake consolidation and co-operation," the agency quotes an unidentified AVIC I vice-president as saying.
It adds: "The industrial manoeuvre was intended to concentrate preponderant resources of both companies and prepare the industry for the production of large jets."
Chinese government officials have been saying over the past year that the country hopes eventually to be building large aircraft seating at least 150 passengers, putting it into direct competition with Airbus and Boeing.
Last year, China's State Council approved in principle the start of research and development of large aircraft and a formal project company is expected to be set up in the coming months, part-owned by both AVIC I and AVIC II as well as other state-run companies.
Official media reports say one option to be considered is for AVIC I and AVIC II to spin off their respective civil manufacturing businesses into a single holding company. Over the past six months, both AVIC I and AVIC II have been separating some of their respective subsidiaries' military and civilian businesses, in part to help them partner western companies that may not be allowed to do business with Chinese defence firms.
At the time of its split in mid-1999, AVIC was an enormous holding company with a combined workforce of more than 500,000. It manufactured a large variety of aerospace and non-aerospace products, such as civil and military aircraft and aero-engines, missiles, automobiles, motorcycles, buses, air-conditioning equipment and textile machinery.
As part of the company's split into two holding companies, AVIC I took over 53 large and medium-sized industrial enterprises, 31 research institutes and 20 other companies, and had more than 280,000 employees. AVIC II, which took over far fewer aviation-related businesses, had 54 industrial enterprises, three research institutes and 22 other companies, with a total workforce of 220,000.
According to state-run media, AVIC I, which is developing the ARJ21 90-seat regional jet which is being prepared for its first flight, now has 240,000 employees and assets of more than 100 billion yuan ($13.7 billion). It is the parent of 47 industrial enterprises and 31 research and development institutes.
The smaller AVIC II, which also still has more than 200,000 employees, is reported to have assets of 31.5 billion yuan. Its civil aircraft work largely is based around general aviation and turboprop passenger aircraft production.
Source: Flight International
