China Aviation Industry I (AVIC I) has finalised plans for a structural reform aimed at turning round the bloated and poorly performing conglomerate.

Formed two years ago after Aviation Industries of China (AVIC) was split in half, AVIC I sees redundancies among its subsidiaries and research institutes as a key requirement. "The second problem is low efficiency," says AVIC I executive vice-president Yang Yuzhong. The company has "several hundreds of thousands of people" working on military projects that create a "product value of only 10 billion yuan [$1.2 billion]", says Yang.

AVIC I produces commercial aircraft including the MA-60 turboprop and plans to develop the proposed ARJ21 79- to 99-seat regional jet family. It also makes military fighters, bombers, trainers and transports.

AVIC I has also identified the problem of "low-level specialisation", which means that although the company's employees are strong in conventional machining capabilities, they lack ability in avionics and other "greatly needed" areas, such as aero engine production and research skills.

Yang says investment from "multiple sources" is required to reduce reliance on government funding.

The proposed restructuring of AVIC I will be focused on operations within its core aerospace businesses. Under the plans, the core aerospace businesses will be separated from the parent company and will operate under a new corporate structure. Subsidiaries specialising in airframes, engines and equipment will be regrouped into business units and branch companies and subsidiaries will be focused on each of the three disciplines. Each business will comprise a research and development, manufacturing, sales and product support function.

Source: Flight International