China’s Government has approved plans for a merger of state aerospace giants China Aviation Industry Corp I (AVIC I) and China Aviation Industry Corp II (AVIC II), nine years after the two companies were created from a split of the former Aviation Industries of China (AVIC).

The official Xinhua news agency says China Aviation Industry Group Corporation is the new company that will be formed from what it says will be the “re-merging” of AVIC I and AVIC II, which together employ hundreds of thousands of people.

It says the Government has approved a “preparation group” for the enlarged company that is led by AVIC I’s general manager “and the new company is expected to be officially inaugurated in July”. Xinhua says no further details are available at this stage.

In January state-run media first reported that discussions were being held on the possible merger of some or all of AVIC I and AVIC II in a move linked in part to the country’s aim to develop large commercial aircraft.

China recently established a new company to oversee the development of aircraft seating at least 150 passengers and both AVIC I and AVIC II are shareholders.

It remains unclear whether all of the many divisions of AVIC I and AVIC II will merge or whether the merger will encompass only some of their operations, such as only civil businesses or their extensive military businesses.

Xinhua says the current structure of the country’s aerospace sector, with two large manufacturing groups, “is not conducive to integrating resources and gives rise to redundant projects”.

AVIC I and AVIC II were formed from the split in the middle of 1999 of AVIC, which was an enormous holding company with a combined workforce of more than 500,000. It manufactured a large variety of aerospace and non-aerospace products, such as civil and military aircraft and aero-engines, missiles, automobiles, motorcycles, buses, air conditioning equipment and textile machinery.

As part of the split into two holding companies, AVIC I took over 53 large and medium-sized industrial enterprises, 31 research institutes and 20 other companies, and had more than 280,000 employees. AVIC II, which took over far fewer aviation-related businesses, had 54 industrial enterprises, three research institutes and 22 other companies, with a total workforce of 220,000.

AVIC I today has 240,000 employees and assets of more than 100 billion yuan ($14.5 billion), says Xinhua. One of the company’s most high-profile civil aviation projects is the ARJ21 90-seat regional jet, which is being prepared for its first flight.

AVIC II  has more than 200,000 employees and assets of 31.5 billion yuan. Its civil aircraft work is based largely around general aviation and turboprop passenger aircraft production, in addition to a joint venture with Embraer under which the Brazilian company’s ERJ-145 regional jets are produced in China.

Both AVIC I and AVIC II are also partners with Airbus in a plan to assemble A320-family aircraft in China.

Source:'s sister premium news site Air Transport Intelligence news

Lead image - an ARJ21 - one of the AVIC I's most high-profile civil aviation projects

Source: Flight International