General Electric Co, the world's biggest jet-engine maker, said it's confident of winning a US$250 million order to supply Air China, the nation's largest international carrier, with engines for its 20 new Airbus SAS A319 planes.
Fairfield, Connecticut-based General Electric will also boost purchases of products in China such as chemicals, lighting and plastics to US$5 billion in 2005 from US$1.1 billion in 2001, Li Hsi, president of GE Aircraft Engines for the Greater China region said in an interview.
PHOTO: AP
Boeing Co and Airbus, the world's two biggest aircraft makers, and General Electric are increasing procurements in China to help them gain orders in the world's fastest-growing aviation market. Passenger numbers in China will probably increase 8 percent annually in the next two decades, compared with a global average of 7.1 percent, or 5.1 percent excluding China, according to Boeing.
"We have a good chance of winning" the engine order, Hsi said before the opening of the Beijing Aviation Expo 2003.
"Overall, GE has been pretty successful in China. We haven't lost any deals." General Electric expects to provide Air China with at least 40 CFM56 engines, made by CFM International, a venture between GE Aircraft Engines and Snecma SA of France, Hsi said.
The average cost of the engines is US$5 million each, according to Olivier Laroche, director of China operations for Snecma Moteurs, a subsidiary of GE's engine venture partner.
General Electric is competing with International Aero Engines AG, which builds the only other engine for the A319 aircraft. International Aero Engines is a venture that includes Pratt & Whitney, a unit of United Technologies Corp, and Rolls Royce Plc.
Air China will probably make a decision on the order next month, Hsi said. It will take delivery of the new aircraft between August next year and 2007, he added.
Of its US$5 billion procurement program in China, General Electric will spend US$450 million on aircraft engine parts. It bought US$40 million worth of engine parts from China last year.
"Localization is part of our strategy," Hsi said. "This is beneficial for both" because it lowers General Electric's production costs and gives Chinese companies access to GE's technology and management know-how.
The Chinese government wants to improve the country's aviation manufacturing ability as part of its plan to develop its own aircraft.
"The Chinese would love to have some engine work done in China because that's one big weakness in Chinese aviation now," said Jim Eckes, managing director of Indoswiss Aviation. "Making an aircraft engine is a lot more difficult than just making other aircraft parts."
Airbus, the world's second-largest planemaker, said yesterday it plans to buy US$60 million of parts a year from China by 2007 to tap lower labor costs and increasing demand for new aircraft in the country.
Boeing, the world's largest aircraft maker, said Monday it plans to buy US$800 million of parts from China between now and 2010. The company has bought US$500 million worth of parts from Chinese manufacturers so far. Chinese companies make parts for Boeing's 717, 737, 747 and 757 airplanes.
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