After months of speculation, the US$1billion Chinese consortium, which is a joint venture partner of Airbus for the A320 aircraft final assembly line in Tianjin, yesterday announced its shareholding structure.

 

The formation of the partnership is seen as a major step in clearing the way for the launch of a project that could have a lasting impact in the development of Tianjin as an economic center in North China.

 

The expected technology transfer from the joint venture with Airbus could also help expedite China's quest to develop its own large commercial aircraft.  

 

The Chinese consortium, Tianjin Zhongtian Aviation Industry Investment Co Ltd, will have a registered capital of 300 million yuan (US$38 million).

 

Tianjin Free Trade Zone Investment Co will invest 180 million yuan (US$23 million) and control 60 percent of the consortium. The remainder will be equally shared between China Aviation Industry Corp (AVIC) I and AVIC II. These are China's two leading aviation manufacturers.

 

AVIC II's 20 percent stake is again equally divided between its two subsidiaries Jiangxi Hongdu Aviation Industry Co Ltd and Hafei Aviation Industry Co Ltd, according to a joint statement by the two listed companies to the Shanghai Stock Exchange.

 

But details of the work structure of the Chinese companies wasn't available. "We haven't reached a conclusion about how to share the work in the Tianjin plant," said Chen Guanjun, director of AVIC I's department of marketing and international cooperation.

 

Media reports have said Airbus would hold 51 percent of the joint venture but the European aircraft maker declined to comment. Airbus selected Tianjin in May to establish its first aircraft assembly line outside Europe.

 

The European giant said earlier that the Tianjin plant would employ about 600 people when it starts operation in 2009. The port city is also likely to attract investments from other aviation-related businesses such as aircraft coatings and cabin interior production.  

 

"It would be easier for China to realize the target of building its own trunk-line aircraft by involving AVIC I and AVIC II in the Tianjin project," said Li Lei, an aviation analyst with CITIC China Securities.

 

China plans to develop its own trunk-line commercial aircraft with at least 150 seats during the 11th Five-Year Plan (2006-10).

 

AVIC I have been concentrating on developing regional jets with fewer than 100 seats. The ARJ21, designed by AVIC I, has received 71 orders and will enter commercial service in 2009.

 

"We want to become the backbone of China's trunk-line aircraft making industry," Hu Wenmin, AVIC I's vice-president, said earlier.

 

AVIC I used to collaborate with McDonnell Douglas in making MD-80 and MD-90 aircraft.

 

(China Daily November 21, 2006)