Joint venture: CASC Willis Engine Leasing Co., Ltd.

At Datenna, our China experts continuously track and conduct detailed investigations into joint ventures that have been established between European and Chinese entities, located in China. Through a series of articles in our resource library, we highlight striking EU-China joint venture case studies, analysed based on Datenna’s in-depth, unique data on China’s techno-economic landscape. This article elaborates on the joint venture CASC Willis Engine Leasing Co., Ltd., jointly set up by US company Willis Lease Finance Corporation and China Aviation Supplies Co., Ltd.

Short read

  • The Shanghai-based joint venture CASC Willis Engine Lease Company Limited was established in 2014 in collaboration between US company Willis Lease Finance Corporation and China Aviation Supplies Co., Ltd. (CASC)
  • The main purpose of the joint venture is to respond to Chinese demand for leased commercial aircraft engines, aviation assets and supply engine support solutions for Chinese airlines.
  • Datenna’s research concludes that CASC has Chinese state-owned entities among its shareholders, and holds a series of agreements with domestic and foreign companies for the maintenance and supply of aviation components.

The joint venture

CASC Willis Engine Leasing Co., Ltd. is a joint venture established in 2014 in collaboration between US-company Willis Lease Finance Corporation and China Aviation Supplies Co., Ltd. It was set up within the Shanghai Pilot Free Trade Zone and, as a consequence, benefited from the incentives offered by local authorities to companies that establish their business there.

The joint venture combines the two shareholders’ relative strengths to supply engine support solutions to Chinese airlines and create an engine resource sharing platform. It targets the Chinese market in particular, as China has shown a rapid growth in the demand for leased commercial aircraft engines. According to statistics, by the end of 2021, 62 percent of China’s 4,054 registered passenger planes were leased, a significant increase from 35 percent in 2010. Generally, airline companies prefer to lease rather than buy new aircrafts, as it provides more flexibility and liquidity.

Willis Lease Finance: an established player

Willis Lease Finance Corporation, the US partner, is a jet engine lessor which mainly leases commercial aircraft and engines to airlines and manufactures, and repairs aircraft engines. The company was established more than 30 years ago by Charles F. Willis and has the largest and most diverse engine portfolio in the industry, surpassing $1 billion in total assets. The company does not only work with the domestic market but is also present in 110 other countries including China. In fact, Willis Lease has been a long-time leader in engine leasing and maintenance, repair, and overhaul operations in China. With the joint venture these operations will be further strengthened.

CASC and its links with government entities

The main business scope of the Chinese partner, China Aviation Supplies Co. Ltd. (CASC*), is providing supplies assets to state-owned aviation enterprises. Moreover, it aims at facilitating innovation, especially in the field of industrial security. The company was officially established following joint investment from five state-owned entities under the direction of the State-owned Assets Supervision and Administration Commission. China Southern Airlines, a state-owned enterprise, is the biggest shareholder with a 24% stake in the company.

CASC is already engaged in several partnerships and has provided aviation components and supplies services for several airlines. All these partnerships aim at strengthening innovation and cooperation, using the companies’ respective advantages and forming strong linkages with strategic agreements. For example, it collaborates with Air China, the flag carrier of the People’s Republic of China, providing customized solutions and support systems, and signed a long-term total component maintenance contract with Lufthansa Technik Shenzhen. According to the deals signed with Guangzhou Aircraft Maintenance Engineering Company Limited (GAMECO), the two companies will cooperate in aviation material sharing, consumable parts supply, component support and other fields.

* It is important to note that China Aviation Supplies Co., Ltd. (CASC), the Chinese shareholder of the joint venture, is a different entity from China Aerospace Science and Technology Corporation (CASC). The latter company is one of the ten military-industrial conglomerates that form the backbone of China’s national defence industry.

China’s aviation industry and it’s national plans

The joint venture analysed in this case study, and more generally the investments, MoUs and cooperation agreements concluded in the aviation sector, is connected to China’s aim to gain additional technological expertise in the field of aviation with the ultimate goal of producing air planes domestically.

In aviation, China still primarily relies on other nations in terms of production. With the national plan Made in China 2025, the goal is to reduce reliance on foreign technology in many fields, including aviation, and help domestic companies to be competitive at a global level. In this context, China is speeding up the reorganization of its state-owned enterprises to improve their competitiveness and make strategic alliances and acquisitions.

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