Air China Strengthens Competitiveness In Aviation Maintenance

In December 27th, many analysts said in a telephone interview with reporters.

In December 16th, China National Aviation and CFM international company announced the establishment of Sichuan international aero engine maintenance company (Ssamc), which accounted for 60% and 40% respectively of Air China and CFM.

The predecessor of Ssamc is Sichuan's air engine maintenance Co., Ltd., China's Air China joint venture, and China Air China's shareholding ratio was 43.64% in 2009.

Beijing Aircraft Maintenance and Engineering Corporation (Ameco) is also a joint venture of Air China, China Air Holding 60%.

Hu Yuliang, general manager of Ameco, revealed at the Eighth China International Aviation and aerospace exposition: "sales of Ameco are nearly 3 billion yuan, and annual profit growth is about 4% or 5% of sales."

Li Lei, an analyst at CITIC Securities and Research Institute, told reporters during a telephone interview that China Air China has three major repair bases in Beijing, Shanghai and Chengdu. Among them, Ssamc mainly provides services for Chengdu aircraft, with the number of aircraft exceeding 10% of the total number of Chinese air planes, while the number of Beijing aircraft accounts for 50% of the total.

Ping An Securities analyst Chu Hai and Sun Chao in the Research Report believe that China Air China's new joint venture maintenance company is optimistic about the growth potential of the maintenance market.

According to the research report, Air China is expanding its competitiveness in the field of aviation maintenance. According to the planning of the Civil Aviation Administration, by 2020, the total number of civil aviation aircraft in China will be close to 5000, double the number in 2010, and the market space of aviation maintenance business is huge. Air China has just completed a joint venture with Snecma company, increased investment in engine maintenance companies, and its holding Ameco, China Air China will gradually become the leading competitive force in the aircraft maintenance market.

According to the research report, the rapid growth of domestic aircraft, and the expansion of maintenance capacity and maintenance personnel is a relatively slow process. The current supply and demand situation causes maintenance engineering companies to maintain better profitability.

The potential of aviation maintenance market has also been affirmed by Ameco general manager Hu Yuliang. Hu Yuliang once said in an interview: "in the next 10 years, the market value of global MRO (repair and overhaul) will grow at an average of 4.4%, while the growth rate of China's market will reach 8%."

Information from the China Civil Aviation Maintenance Association website shows that as of the end of 2008, there were about more than 360 domestic civil aviation maintenance enterprises approved by CAAC. In 2008, the output value of China's civil aviation maintenance industry was $1 billion 750 million, and nearly 1 billion 900 million dollars in 2009, and it is expected to reach 2 billion 100 million US dollars in 2010.

In December 27th, an analyst who asked not to be named told a telephone interview that at present, domestic aircraft maintenance and engine maintenance capabilities remained saturated. The appointment of maintenance works required two to three months in advance, and the situation that the aviation maintenance market was in short supply would last for 5 years.

The analyst analyzed the rapid growth of demand in aviation maintenance field, but the aviation maintenance engineer has a long training cycle and slow growth in supply. China Aviation's investment in the field of maintenance will gradually become a leading competitive force in the aircraft maintenance market.