Chinese plane engine firms 'to be merged into $31b group'

BEIJING • China plans to merge more than 40 entities working on plane engines into one group with 145 billion yuan (S$31.6 billion) in assets as part of a broader push into advanced industries to propel its economy, people familiar with the proposal said.

The entities have combined assets of about 110 billion yuan, the people said, asking not to be identified because the discussions are private. The Chinese government and companies including the Aviation Industry Corp of China (Avic) will invest an additional 35 billion yuan under the plan, which could be announced as soon as this month, they said.

China is eager to develop its own engine to power its planes, and is also keen to push its economy from labour-intensive work into more sophisticated sectors. 

The Made in China 2025 blueprint, released last March, citedaerospace as a sector that leaders hope will help make China into an advanced economy along the lines of Japan and Germany.

The Shanghai-based Commercial Aircraft Corp of China (Comac) is developing the C919 single-aisle jet, which is expected to make its first test flight this year.

CFM International, a joint venture between GE Aviation and a division of France's Safran, will supply a version of its LEAP engine for the initial C919s.

Shares of Avic Aero-Engine Controls closed 7.7 per cent higher yesterday in Shenzhen, while Avic Aviation Engine Corp ended up 6.7 per cent in Shanghai.

AviChina Industry & Technology finished up 8.6 per cent at HK$5.55 in Hong Kong in its biggest single-day gain since Oct 2.

The new company will contain almost all assets related to aerospace engines in China, the people said.

China's state-owned Assets Supervision and Administration Commission, the Ministry of Industry and Information Technology and Avic did not immediately respond to requests for comment.


A version of this article appeared in the print edition of The Straits Times on January 20, 2016, with the headline 'Chinese plane engine firms 'to be merged into $31b group''. Print Edition | Subscribe