Commercial Aircraft Company in China

April 4, 2008 by  
Filed under Features

There is a lot of excitement in the Chinese aeronautics industry at the moment. The country is busy establishing a commercial aircraft company that will not only generate a lot of money but will also see more participation in the country from foreign countries and enable more local people to travel.

While other countries make use of Airbus and Boeing airplanes, China is dead set on creating its own commercial aircraft. Operating under the name of China Commercial Aircraft Co. Ltd, the company is already suffering a six-month set-back on the ARJ21 regional jet. The company hopes to eventually develop an airliner that has over 150 seats, so that more people can take to the skies. Avic 1 and Avic 2, the two current Chinese aircraft conglomerates, each have a minority stake in the company. However most of the money used comes from governments or state companies that are not related to the aircraft industry. The government has the largest shares in the company and will control the company by means of this. The second-largest shareholder is the city of Shanghai.

Only 19 billion yuan ($2.7 billion) has been set aside for capital for the new airliner company. This is quite a big drop from the 60 billion yuan development costs of a new airliner that was proposed by the Communist Party secretary of Shanghai in January. The drop in cost has enabled all of the major shareholders to contribute reasonable amounts of money, which in turn has enabled the project to finally get off the ground.

The fact that the new aircraft company will be almost entirely owned by the government is unusual for China. It is hoped that stakes in the company will eventually be sold to non-state investors.

The company’s first new airliner will hopefully take to the skies around 2020. In the meantime, the ARJ21 is set to take off around September or October of this year. In addition to this, the Avic 1 Commercial Aircraft Co. will be contributing assets to the company to ensure that it gets its feet off the ground as soon as possible.

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