Cargo Conversion Partnership

Pemco Aviation Group, Taikoo Aircraft Engineering Company (TAECO), and Taikoo (Shandong) Aircraft Engineering Company (STAECO) signed an agreement in Jinan on January 7th establishing a cargo conversion partnership for China and the Asia Pacific region. Under the agreement, the companies will jointly market freighter conversions and perform conversions at TAECO / STAECO's facilities in China.

Participating in the ceremony from Pemco were Harold "Skip" Bowling, Vice Chairman of the Board of Pemco Aviation Group; Kevin Casey, Vice President, Commercial Business Development; and Bob Watson, Managing Director, Asia Pacific. Prominent among the many TAECO and STAECO executives present were P.K. Chan, Chairman of TAECO and Hong Kong-based HAECO; Joseph Wong, TAECO Board member and HAECO executive; Jia Fu Wen, Chairman of STAECO and President of Shandong Airlines; John Chi, Chief Operating Officer of TAECO; Huang En Fang, General Manager of STAECO and Vice President of Shandong Airlines; and Sam Goh, General Manager, Engineering and Projects of TAECO.

The alliance will focus initially on B737 aircraft, and plans to cooperate on other aircraft models, both those for which Pemco currently holds Supplemental Type Certificates (STCs) and other models as markets develop. Pemco will provide technical, operational and quality oversight and guidance while TAECO / STAECO will provide Mainland-based production facilities, a seasoned workforce, and draw on their relationships with aircraft operators in the region.

In attendance representing General Administration of Civil Aviation of China (CAAC) was Xu Chao Qun, Deputy Director General, Flight Standards Department. Commenting on the significance of the event, Xu stated, "This is an historic hour in China Aviation and CAAC will fully support this program."

Ron Aramini, President and Chief Executive Officer of Pemco Aviation Group, explained the significance of the agreement. "The air cargo market in China is experiencing the fastest growth in the world, with more than 20% annual growth over the past five years and projected growth exceeding 10% annually. In order to effectively pursue this market and support our current and future customers, Pemco felt it important to have a strong Chinese partner. Through this alliance with TAECO / STAECO, we now have a partner that will provide excellent customer relationships and extensive experience in freighter conversion programs and aircraft maintenance."

PK Chan, Chairman of TAECO stated, "This partnership is very beneficial for both parties. It allows us to offer our customers an expanded spectrum of cargo conversions. Pemco's B737-300 freighter and QC are the only B737 conversions currently approved by the CAAC and we are pleased to be able to provide this program to our customers."

Aramini added, "This partnership firmly establishes Pemco's presence and commitment to China and the rest of the Asia Pacific region. It is an important step in our strategy to significantly expand our cargo conversion business in 2005. We look forward to working with our new partners, TAECO / STAECO." The companies plan to begin conversions in China this year.

FMI: www.pemcoaviationgroup.com