January 7, 2008 / 10:50 AM / 12 years ago

China to establish company to build large jet

SHANGHAI, Jan 7 (Reuters) - China will set up a company to develop and build large commercial jets early this year as it tries to reduce its reliance on Boeing (BA.N) and Airbus EAD.DE, the official Xinhua news agency said on Monday.

A project leader and a chief designer will be appointed to the firm before the end of March, Xinhua quoted Huang Qiang, secretary general of the Commission of Science Technology and Industry for National Defence, as saying.

Huang did not disclose further details, but Chinese media said this month that China would restructure its two state aircraft makers, AVIC I and AVIC II, primarily so they could pool resources to build large aircraft.

Details of the restructuring are still being discussed at the central government level, but it is expected to involve merging some of the two firms’ assets.

AVIC I, parent of Xi’an Aircraft International Corp (000768.SZ), is developer of the ARJ21 regional jet. AVIC II’s Hafei Aviation Industry Co (600038.SS) makes the ERJ-145 regional jet in partnership with Brazil’s Embraer (ERJ.N)(EMBR3.SA).

China unveiled the 90-seat ARJ21-700, its first domestically developed regional jet, late last month and the plane is due for its first test flight this spring.

But China’s long-term goal is to make large passenger jets with more than 150 seats, or freighters capable of handling more than 100 tonnes of cargo, to give it a presence in the global commercial jet market. (Reporting by Fang Yan; Editing by Paul Bolding)

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