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The mainland will reunite its two state-owned aircraft manufacturing companies under the name China Aviation Industry Corp to compete more effectively in building a wide range of aircraft, including large jetliners, military  jets, helicopters and smaller planes.
The two  aircraft  makers, Avic I and Avic II,  would be recombined next month,  nine years after they were separated,  Xinhua reported yesterday.
'It is a rational and natural evolution, since from the very beginning the two firms should not have been split up,' said Yuen Liben, an adviser to China Aviation Industry Corp I (Avic I).
In 1999, the old China Aviation Industry Corp divided its assets into Avic I and Avic II, hoping competition between the  firms  would bring more technology advances, Mr Yuen said.
'However, the technology in China lagged behind that of the west and the dispersed resources only  made  [the two companies] weaker,' he added.
Analysts say China cannot afford  any more technological delays as it tries to lessen  reliance on Boeing and Airbus for aircraft.  The country, one of the fastest-growing air transport markets, needs 2,100 to 2,400 passenger  jets over the next 20 years.
On May 11, the  Commercial Aircraft Corp of China  was established to lead  the development of its own 150-seater aircraft.
Avic I and Avic II are the major shareholders, with Avic I expected to do much  of the work.
'The new corporation would be bigger, more comprehensive and more rounded,' said Avic I senior vice-president Hu Wenming,  adding the decision  was  government-driven rather  than corporate-driven.
Mr  Hu said  because of the consolidation,  Avic I  had to alter its spin-off plan, but he did not elaborate.  On June 29 last year, the firm said it planned to list its Shanghai  aircraft plant and  to produce its ARJ21 regional aircraft.
The committee charged with organising the new firm is led by Avic I general manager Lin Zuoming and co-chaired by Avic II vice-general manager Tan Ruisong,  Xinhua said.
Hong Kong-listed AviChina Industry & Technology,  a subsidiary of Avic II, rose 4 per cent to HK$1.40 yesterday.
Shanghai-listed Hafei Aviation Industry,  the helicopter manufacturing arm of Avic II,  surged 10 per cent to 15.48 yuan (HK$17.54). Xian Aircraft International, a subsidiary of Avic I, rose  0.2 per cent to 17.10 yuan in  Shenzhen.
Avic I, which  makes military  and regional civil aircraft, has some overlapping businesses with Avic II, which is more focused on helicopters and small civil aircraft.
Mr Yuen predicted that the overlapping businesses, such as the aircraft electronic devices division,  would be consolidated.
Top guns
1950s: China?s aeronautics industry established with four bases at Xian, Shanghai, Shenyang and Chengdu capable of building civilian and military aircraft.
Aviation Industry of China (Avic) evolves from repair and maintenance work to building planes of its own design.
Over the years, Avic expands into a network of 111 enterprises, 36 research institutes, 6 universities
and colleges, with a staff of 560,000.
The company becomes responsible for developing and manufacturing military aircraft, civil aircraft,
missiles and aeroengines. It also has a market presence in industrial equipment, gas turbines, cars, motorcycles and refrigerating machinery.
July 1999: In an effort to become more competitive, 10 new state-owned aviation corporations are established, including splitting Avic into Avic I, which focuses on military aircraft and large and medium-sized civil aircraft, and Avic II, which gives priority to feeder aircraft and helicopters.
June 2008: Government announces that the companies are to be reunited as China Aviation Industry Corp.



Avic firms reuniting to form aircraft manufacturing giant