[photopress:air_avic.jpg,full,alignright]Airplane manufacture is a game for big players or governments. The amount of investment needed is mind-boggling.
Now expectations are growing that China will restructure its sprawling state-owned aircraft makers, Avic I and Avic II. This action is urgently needed to make them more competitive and to pool their resources to develop large commercial jets.
Beijing has yet to publicly comment on government plans for the companies and any restructuring would require a consensus among their bureaucratic overseers, which will be difficult to achieve.
Merging companies mostly means that some individuals lose power and status. Getting them to agree is like pulling teeth.
Local media, however, reported this week that an announcement is likely by March outlining some form of consolidation.
The official China Daily said the move was aimed at ‘strengthening the country’s aviation manufacturing capabilities’ and ‘pooling resources to carry out the large commercial airplane project.’
The two groups were created less than a decade ago through the splitting of China’s former aircraft manufacturing monopoly. They both compete and co-operate across a range of aviation-related businesses.
If successful, reorganisation would help Beijing to meet its ambitious target, announced last March, to launch production of large commercial aircraft by 2020.
However, while Avic I recently unveiled the ARJ-21, a locally assembled regional jet with up to 100 seats – and both it and Avic II build 50-seat turboprops – analysts say it is unclear whether individually they have the capacity to develop a competitive large jet.
Restructuring could also prove bureaucratically fraught. The two groups do not have a clear shareholding structure and come under the split authority of China’s state-owned Assets Supervision and Administration Commission and its Commission of Science, Technology and Industry for National Defence. It is a bureaucratic mess which will need toough decisions to get sorted.
Source: Financial Times