New Company Targets Future Commercial Aircraft Programs, Creates U.S. Jobs

GE Aviation and Aviation Industry Corporation of China (AVIC) announced the signing of the agreement to form their new joint venture company on Friday. Chinese Commerce Minister Chen Deming and the U.S. Commerce Secretary Gary Locke witnessed the public signing by David Joyce, president and CEO of GE Aviation and Zhang Xinguo, vice president of AVIC today in Chicago.

The new AVIC and GE joint venture company will develop and market integrated, open architecture avionics systems to the global commercial aerospace industry for new aircraft platforms. This system will be the central information system and backbone of the airplane’s networks and electronics and will host the airplane’s avionics, maintenance and utility functions. GE and AVIC will continue to service their legacy programs and existing contracts with customers. The agreement is subject to government approvals and the issuance of an operating license.

This 50/50 joint venture represents a significant milestone in the growing aerospace relationship between Chinese aviation industry and GE Aviation since the mid-1980s. Chinese airlines now operate more than 2,500 jet engines produced by GE and CFM International (joint company of GE and Snecma), with an additional 1,000 engines on back order. GE Aviation's collaboration in China also involves investment in a network of facilities for technical training, manufacturing, spare parts distribution, and engine maintenance and overhaul. Additionally, GE is powering China’s new ARJ21 regional aircraft and CFMI was selected to power the new Chinese C919 aircraft.

The new GE-AVIC joint venture extends the relationship beyond engines into commercial avionics. It will enable GE and AVIC to grow a business together that will create jobs globally, including hundreds of new jobs in the US, the UK and China.

“The JV will build on the extensive avionics capabilities of both companies and create a technology center of excellence to serve the commercial aviation market," said David Joyce. "GE's aviation business in China results in 1,800 high-technology jobs in the U.S. The jobs are involved in producing and supporting jet engines for China, as well as developing the new engine and avionics system for the C919."

The joint venture company will be headquartered in China and will be the single route-to-market for integrated avionics systems for both GE and AVIC for new commercial aircraft. Also, GE and AVIC will each provide avionics products to the joint venture company as a customer and distributor. “The combination of AVIC and GE's aviation experience, technical know-how and people skills will lead to the development of highly competitive commercial avionics products,” said Zhang Xinguo. “AVIC is looking forward to a long and successful partnership.”

The name of the joint venture is GE-AVIC Civil Avionics Systems Company Limited. The joint venture will have its Chairman and General Manager nominated by AVIC and GE respectively with final approval from its board of directors. The company will be initially located at Zizhu Digital Hub Science Park in Shanghai until a permanent location is secured.

“The joint venture will work to secure systems and other avionics products on future aircraft adding to the overall economic value and jobs created,” said Lorraine Bolsinger, president and CEO of GE Aviation Systems. “The JV and C919 program will support and maintain at least 300 high-tech jobs locally in each the US and China. This venture will challenge our team to come up with break-through technology. GE and AVIC will together develop a world-class engineering organization and the JV itself will be creating new IP and new technology. This is a 50/50 partnership; you have to be all in and be very committed.”

The initial focus for the joint venture is integrated avionics systems for the C919 aircraft. This selection was formalized in a Letter of Intent with COMAC memorialized in a public signing on July 12, 2010. COMAC anticipates delivering more than 2300 C919 aircraft over the 20-year life of the program. This market potential provides an estimated value for the AVIC GE avionics systems of approximately $2 billion.

Jeff Immelt, Chairman and CEO of GE and Lin Zuoming, president of AVIC, originally signed the framework agreement on November 15, 2009 regarding the formation of the visionary joint venture and the intention of jointly creating a market-leading integrated avionics system supplier.

FMI: www.avic.com.cn, www.ge.com