Two deals announced last week involving a combined 300 fixed- and rotary-wing aircraft signal a new wave of Chinese investment in US general aviation companies.
A delegation of civic leaders from Wuhan, a Chinese city of 10 million people, signed purchase agreements to buy 200 Liberty Aerospace XL-2 two-seat trainers and 100 helicopters from an undisclosed manufacturer, believed to be Vertical Aviation Technologies, which is offering the kit-built, four-seat Hummingbird 260L helicopter.
In the weakened general aviation sector, the announcements seemed extraordinary enough to be unlikely. After all, Liberty delivered only three aircraft in 2011 and 132 overall since the type entered service in 2005, according to the General Aviation Manufacturers Association.
Liberty now has an order exceeding its prior seven-year backlog from a customer that has never previously purchased an aircraft from a Western manufacturer.
But the Wuhan order is, if anything, symbolic of China's growing ambitions for rapid development of its general aviation sector, as well as revealing its strategy.
In both cases, Wuhan selected aircraft that already possess airworthiness certificates from the Chinese government, but have struggled in a depressed US general aviation market. Production at Brevard, Florida-based Liberty Aerospace has actually stopped.
"This is a wonderful catalyst to restart production," says Chad Lewis, managing director of North America for Federal Aerospace, which serves as a broker between US aircraft manufacturers and Chinese government agencies.
The deals are shaped to allow the US companies to continue building components and sections in Florida, but assembly will be transferred to China, Lewis says.
"Obviously from an economic development standpoint, the folks in China are interested in creating jobs there," he adds. "The beautiful thing about the Liberty platform is it's made in sections. Because it's made in components, there's other work that can be done very economically in China."
Ultimately, Wuhan's civic leaders are also working to take ownership stakes in both companies.
"We are in discussions with the folks at Liberty at just what that structure will look like and, hopefully, we'll have some announcements on that in the next few weeks," Lewis says.
The helicopter order is also intended to lead towards a buy-out of the company, but these discussions are also still under way, he says.
Wuhan's interest in the general aviation companies is part of the city's strategy to become a hub for training general aviation pilots, as China enacts reforms to unlock airspace for privately-owned aircraft. "They've got the facilities, capital and buying power," Lewis says.
It is not only Wuhan taking aim at the depressed US manufacturing sector for general aviation and business aviation. Chinese Aviation Industry General Aviation has acquired Cirrus Aviation, while Superior Aviation Beijing remains in talks to buy Hawker Beechcraft.
Wuhan is not even the first Chinese entity to attempt to take over Liberty Aerospace. In fact, Liberty announced an even larger deal for 600 XL2s by a Beijing-funded company in 2007, but only a handful of aircraft deliveries were completed under that order.
A cautionary tale, perhaps? Far from it, insists Lewis. Two things worked against completing the deliveries under the original deal with Liberty, he says. First, the certification process for the XL2 consumed more time than expected. Secondly, Liberty expected the Chinese air space to be open to private aircraft by 2010, but that milestone has been delayed until at least 2014.
"This time the timing is right," Lewis says. "Sometimes, the second mouse gets the cheese and in this case we're the second mouse."
Lewis's company, Federal Aero, represents a consortium of Chinese government agencies called the Sino-American Government Alliance, which includes Wuhan as a member. The consortium is already working on even more deals for new aircraft and manufacturers in the USA.
"We're currently involved in a few other transactions that are going on behind the scenes right now that could [lead to] some pretty substantial announcements," he says. "Right now, there's nothing that's off the table."
Source: Flight International