ATW Daily News

COMAC to purchase United Eagle stake to boost aircraft sales

Monday October 19, 2009

Commercial Aircraft Corp. of China last week agreed to purchase a 48% stake in Sichuan Airlines subsidiary United Eagle Airlines in order to facilitate the sale of its ARJ21 and C919 aircraft.

A COMAC source told ATWOnline that the manufacturer will invest CNY1 billion ($146.3 million) in Chengdu-based United Eagle, which under terms of the agreement will order 30 ARJ21s after the stake sale is concluded.

Sichuan acquired 76.2% of UAE for CNY200 million six months ago as the carrier was on the verge of bankruptcy (ATWOnline, March 19). Owing to COMAC's investment, Sichuan's stake will be reduced to 40.97%. Sichuan Communication Investment Group will hold the remaining 11.03%.

UAE is expected to take delivery of its first ARJ21 at the end of 2010. It currently operates seven A320 family aircraft on 35 domestic routes and is expected to add an eighth aircraft at year end.

It plans to rely on the A320 and ARJ21 in the short term, "but we will phase out the A320s gradually and replace them with C919s for the long term," a Sichuan spokesperson told this website. The airline noted it will continue to help Eagle with capacity control, operational management, MRO and human resources.

Sichuan was the first carrier to introduce the A320 into the Chinese market in the1990s. It also took delivery of the first A320 assembled at Airbus's Tianjin final assembly line in June.

Similarly, AVIC launched Joy Air with three MA60s in August. Joy is expected to introduce three more MA60s by year end and plans to acquire 50 of the type, plus 50 ARJ21s, over the next eight years.

by Katie Cantle

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