Comac joins rescue of Sichuan airline to secure regional jet orders
Commercial Aircraft Corp of China (Comac), which is designing and building the country's first large passenger jet, has joined the seven billion yuan (HK$7.94 billion) rescue of a private Sichuan-based airline in a move to secure more orders for home-grown aircraft.
The Shanghai-based aircraft manufacturer has teamed with Sichuan Airlines and Chengdu Transport Investment Group to buy into Eagle United Airlines, according to a Chengdu newspaper.
The three parties signed an agreement to restructure the troubled carrier in Chengdu yesterday.
Eagle United received 200 million yuan from government-owned Sichuan Airlines to avoid being wound up in March.
After securing investors, the company has agreed to buy 30 ARJ21-700s, the country's first 90-seat regional jet from Aviation Industry Corp of China (Avic). It has eight aircraft now.
Comac is responsible for the sale and marketing of the ARJ21 and building the new 156-seat, single-aisle C919.
It is not the first time a mainland aircraft manufacturer has invested in an airline in return for orders.
Avic, which is also providing components for the C919, joined hands with China Eastern Airlines Corp last year to set up Joy Airlines, a Xian-based carrier.
Joy Air, which started operations in June with a fleet of turboprop MD60s made by Avic, has signed a memorandum of understanding to buy 10 ARJ21s.
The ARJ21 and the C919 are designed for secondary airlines to operate between second-tier cities and remote regions of the mainland.
Building airports and aircraft was a more efficient way to connect rural areas with developed regions than building highways, said an industry veteran.
Beijing encouraged the setting up of privately owned airlines to boost the aviation market in the rural areas a few years ago.
However, the financial crisis has pushed some, including Eagle United, towards bankruptcy.
Avic now has orders for 240 ARJ21s, which stands for advanced regional jet of the 21st century.
Most of them are from mainland carriers, including Kunming-based Kunpeng Airlines, which has ordered 100 jets, Shandong Airlines, Shanghai Airlines and Xiamen Airlines.
Firm orders from General Electric and a non-binding agreement of two orders from the government of Laos mark the opening of the international market for the new aircraft.
Up in the air
Comac has joined two firms in a rescue of Eagle United that will cost, in yuan: 7b yuan
