Paul Lewis/BEIJING

Singapore Technologies Aerospace (STAe) is having second thoughts about participating in the planned joint Sino-European AE31X aircraft programme because of financial and workshare uncertainties.

According to industry sources, STAe has in recent weeks voiced reservations to partners Airbus Industries Asia (AIA) and Aviation Industries of China (AVIC) about its future involvement in the planned 100- to 120-seat regional-jet development. China and European officials in response have been attempting to avert a potentially damaging Singapore walk-out.

STAe is understood to be concerned about the programme's projected rate of return and has been seeking assurances that it will see a payback on its 15% investment in the project. Singapore from the outset has made its involvement conditional on there being a clear business case, while AVIC and AIA each appear to be pursuing broader and longer-term strategic goals.

At the same time, Singapore's actual role in the development and production of the AE31X has also been partly undermined by China's decision to bar any indirect Taiwan participation. STAe had been discussing subcontracting a substantial proportion of its workshare to Taiwan Aerospace. Political differences between Beijing and Taipei make this a non-starter for the time being, however.

STAe has been toying with a number of different proposed workshare packages, such as manufacture of the AE3IX's engine pylon, nacelle, landing gear or rear-fuselage assembly. Industry sources suggest that if the company is to keep work in house, it would need to make a sizeable investment expanding its now limited production capabilities.

Added to this, Singapore is known to be expressing growing impatience with the pace of joint-venture negotiations between AIA and AVIC. Its now more than 18 months since STAe officially announced its intention to join the programme, but it is likely to be the end of the year at the earliest before any overall joint-venture agreement can be reached, say sources close to the negotiations.

AIA and AVIC, however, are keen to ensure that Singapore does not follow the example of South Korea, which has pulled out of the project. STAe is seen by many in Beijing and Toulouse as an important political and cultural bridge between China and Europe.

AVIC, in the meantime, has confirmed that it has decided to give Xian Aircraft responsibility for final assembly of the AE31X rather than the previously considered favourite Shanghai Aviation Industrial. The decision by China's State Planning Commission appears to be in line with a policy to promote investment in the country's interior rather than its already highly developed east coast.

Source: Flight International