China Aviation Industry I (AVIC I) plans to spin-off its military aircraft business into a separate entity by 2004, company officials say.

According to AVIC I, the timetable for the plan is preliminary and could change radically. The company says it is also planning stock market listings of some of its civil business units, adding that the government will retain control of the breakaway military company.

AVIC II officials say that they are moving along similar lines. "AVIC II has asked all subsidiaries to divide military and civil products. Now several subsidiaries have a plan to go to the stock market with their civil business," says AVIC II.

However, the company says that there is no plan to bring all its military programmes - including aircraft and missiles - into a single company. One official names helicopter manufacturer Harbin Aircraft Industry and China National South Aeroengine as two AVIC II companies planning a listing. "Reform is the only way ahead for AVIC II," he says.

The company plans to reduce its workforce of 210,000 by 50,000 within five years. It is undecided how this will be done, and predicts difficulties as "unemployment is a big problem in China".

AVICI, which says it employs 260,000 personnel, has previously said that it intends to cut its workforce. AVIC I and AVIC II were formed in 1999 with the break-up of the Aviation Industries of China. AVIC I inherited most of China's military aircraft programmes, apart from the K-8 jet trainer and the A-5 Fantan strike aircraft, both built by Hongdu Aviation Industry Group (formerly Nanchang Aircraft Manufacturing).

Source: Flight International