CHINA Aviation Industry Corp I, the nation's largest aircraft maker, has linked up with China Eastern Airlines Corp to start a new regional carrier to support sales of its own planes.
China Aviation, popularly known as AVIC I, will own a controlling 60 percent of the Xingfu Airline venture with China Eastern holding the rest, the country's General Administration of Civil Aviation said in a statement yesterday. The carrier will use AVIC I's 60-seat MA60 and the ARJ21, which accommodates 70 to 110 passengers.
The joint venture between the two state-owned companies underlines the government's efforts to promote Chinese aircraft.
AVIC I's planes will compete with those made by Brazil's Empresa Brasileira de Aeronautica SA and Canada's Bombardier Inc as the country's fleet is forecast to quadruple to 4,000 planes by 2020.
"The right to make major decisions like aircraft purchasing is important for AVIC I as a newcomer to the airline industry," said Li Lei, a Beijing-based analyst at China Securities Co. "The regional carrier can also help complete China Eastern's existing network."
China Eastern may be able to start flights to smaller cities in the country with the new joint venture, he said.
The Xi'an-based Xingfu Airline will have registered capital of 1 billion yuan (US$141 million), the statement said. AVIC I will invest 600 million yuan in cash.
China Eastern shares rose 5.7 percent to 15.29 yuan in Shanghai yesterday.