Swire Pacific's majority-held Hongkong Aircraft Engineering Co (Haeco) and a mainland partner have agreed to build a US$50 million maintenance facility at Guangzhou Baiyun International Airport to service China's booming aviation industry.
Haeco and its Xiamen-based heavy maintenance subsidiary, Taikoo Aircraft Engineering Co (Taeco), yesterday signed a letter of intent to be the majority partners in a joint venture that will include state-owned Guangdong Airport Management.
A feasibility study will be completed by September before the deal, announced at the Singapore air show yesterday, is rubber-stamped.
'Both Haeco and Taeco are operating at full capacity and the new facility will help us resolve this saturation issue,' Haeco chief executive Chan Ping-kit said. 'It will increase our productivity.'
Swire's facilities have been struggling for the past year to keep up with demand for both line and heavy maintenance services in the face of a robust air travel industry.
Taeco, which specialises in 'heavy' services such as converting passenger aircraft to freighter configuration and engine replacements, has four hangars operational in Xiamen with a fifth due online next year.
Haeco is expanding at Chek Lap Kok and the new deal will give it one foot in the rival market at Guangdong's most promising airport, where it will go head to head with Gameco, a joint venture between China Southern Airlines and Hutchison Whampoa.
'The aviation business at [Baiyun] has grown significantly since it opened,' Guangdong Airport vice-president Lin Yunxian said. 'A second aircraft engineering company will be able to satisfy [the airlines'] growing needs, in particular Federal Express.'
FedEx will open its Asia-Pacific hub in Guangzhou in 2008.