China Inaugurates Commercial Jet Manufacturer

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Commercial Aircraft Corp. of China (CACC) was inaugurated Sunday, having been bolstered by a $2.72 billion cash infusion, almost one-third of which comes from the state. The company is expected to be involved in the development of the 90-seat ARJ21 regional jet, which rolled off the production line last December, should be test flown later this year and may be the first commercial regional jet developed and produced by China. Deliveries are scheduled for 2009. The aircraft's initial specifications "indicate that it's a bit heavier" than current offerings from other manufacturers, according to Teal Group aviation analyst, Richard Aboulafia, and may be built without extensive use of lightweight composites. Still, "they might be able to establish a presence in the business over the next 10 to 20 years," he told the International Herald Tribune. Airbus has forecast that China will need more than 2,600 new passenger jets within the next two decades.

For the venture to succeed, Aboulafia believes it will initially need strong financial support from the government followed by an offering of shares to the private sector. Chinese carriers have so far ordered more than 180 ARJ121s, and General Electric's aircraft leasing arm in March took a spot as the first major foreign customer for the aircraft, signing a preliminary agreement for five ARJ121s. GE supplies parts for the jet. China's goal is to give itself a presence in the global commercial aircraft market, eventually produce aircraft of more than 150-seat capacity, and perhaps reduce dependence on foreign manufacturers that have seen big orders from China in recent years. Shareholders of the new company also include China Aviation Industry Corporation I (AVIC I), the country's largest aircraft producer, and China Aviation Industry Corporation II (AVIC II), according to China Daily.