US giant to sell share of Chinese maintenance joint venture

Lockheed Martin is in talks to sell its 25% stake in Chinese heavy maintenance joint-venture Guangzhou Aircraft Maintenance Engineering (GAMECO).

Industry sources in China say Lockheed Martin, which holds its stake through subsidiary Lockheed Martin Aeronautics Service International, is concerned about high costs involved with the move of GAMECO from Guangzhou's Baiyun International Airport to the city's New Baiyun International Airport in the coming years.

GAMECO is a joint venture with China's largest airline, China Southern Airlines, which holds 50%. The remaining 25% is held by Hong Kong conglomerate Hutchison Whampoa (China).

Established in 1989, the original contract was for 30 years. Sources say Lockheed Martin wanted to extend the contract to 40 years to ensure better returns, but this was initially rejected by China Southern. China Southern eventually agreed, sources say, but then wanted new restrictions added to the agreement, which Lockheed Martin rejected.

The US company has sought a buyer for several weeks, and is in talks with a Singaporean company, said to be SIA Engineering, according to sources.

The Singapore Airlines subsidiary did not respond to requests for comment before Flight International went to press.

GAMECO is one of three major heavy maintenance companies in China, the others being Aircraft Maintenance Engineering in Beijing, and Taikoo (Xiamen) Aircraft Engineering (TAECO) in Xiamen.

SIA Engineering has been seeking to expand in China for some time, particularly after selling a 4.09% stake in TAECO to HAECO early last year.

GAMECO general manager and Lockheed Martin employee Dan Lange declines to comment, but confirms that he is leaving GAMECO at the end of April.

Source: Flight International