Air China to merge Ameco with in-house MRO division

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Air China is planning to amalgamate its maintenance arm with the group’s MRO joint venture with Lufthansa, Ameco Beijing, during the first half of 2014.

The Chinese flag carrier has been planning to merge Air China Technics and Ameco for a number of years, but uncertainty about the effects on the German partner’s standing in the business has been an obstacle.

Now, Ameco says that the merger will be completed during the first half in 2014.

What will happen to Lufthansa’s 40% shareholding in the business and whether the Ameco name will be retained are still unclear, however.

If Lufthansa does not increase its stake, the merger with Air China Technics would likely lead to a reduced shareholding by the German airline in the overall business.

Air China and Lufthansa signed a 40-year contract when Ameco was established in 1989. The base maintenance specialist is China’s largest MRO provider, with half of its business coming from Air China.

While Ameco operates as a partner in Lufthansa Technik’s MRO network today, LHT is not the shareholder in the business. LHT was established five years after Ameco’s formation, when Lufthansa reorganised its engineering division as a wholly owned standalone company.

Meanwhile, Air China set up its in own MRO unit, Air China Technics, in 2004. This mainly conducts line maintenance for the parent fleet, but the carrier wants to expand the business to a full-service MRO provider and attract third-party customers, thus becoming a competitor to LHT.

LHT says that it is discussing the shareholding, but declined to provide any detail before a conclusion has been reached.

August Wilhelm Henningsen, LHT’s chief executive, said in 2011 that the group’s engagement with Ameco was a long-term investment aimed at gaining presence in the Chinese market.