Hong Kong Aircraft Engineering Co (Haeco), which is majority held by the Swire Group, yesterday said it would team up with five partners to invest US$42 million in a Xiamen-based centre for the repair and overhaul of aircraft landing gear.
Expansion-minded Haeco, which already has general maintenance facilities under construction in Hong Kong and Xiamen, has agreed to join sister firm Taeco, Cathay Pacific Airways, Shanxi Liaoyuan Hydraulic Systems, Xiamen Aviation Industries and Xian Aircraft International for the venture.
'China's maintenance, repair and overhaul [MRO] market is undergoing massive growth and this joint venture will ensure we capture those business opportunities,' Haeco chief executive Chan Ping-kit said yesterday.
The facility, expected to be operational by mid-2008, initially will focus on repairing landing gear for Boeing's 737, 777 and 747 models. No equity split was disclosed.
Haeco last month committed HK$900 million to build its third line maintenance facility at Chek Lap Kok and its sixth heavy maintenance facility in Xiamen as it looks to secure its place as China's top MRO provider for years to come.
China is seen as the future home for the aviation industry's MRO activities, surging demand for which is being driven by the airlines' need to cut operating expenses by outsourcing non-core activities in the face of escalating fuel costs.
This is especially true in the booming low-cost carrier sector which now offers 10 per cent of scheduled flights in Asia.
The market has responded well to Haeco's plans. Its shares are up 70 per cent in the past six months, reaching a high of HK$116.80 on Monday. They gained 1.17 per cent yesterday to close at HK$112.