China Airlines signed yesterday a contract to invest in a new composite company, together with Hong Kong Aircraft Engineering Company (HAECO), Taikoo Xiamen Aircraft Engineering Company (TAECO), First Wave, Spirit AeroSystems and Cathay Pacific Airways.

The company, called Taikoo Spirit AeroSystems Composite Co., will be based in Jinjiang, in mainland China’s Fujian Province. The company is scheduled to begin operations at the beginning of 2009, with a registered capitalization value of US$8.48 million. Cathay Pacific Airways and China Airlines each own 7.5% of the company’s capitalized holdings.

CAL made the investment decision because of the rapid growth in the mainland’s aviation market, and because of the low cost of labor, which meets the company’s need for workers and techniques in the area of composite maintenance. It will help CAL to achieve its competitive advantage with lower cost of maintenance.

CAL is confident that this investment will keep it abreast of progress in composite technology, and that it will also enhance CAL’s leading role in maintenance operations, and further promote cooperation between CAL and international companies.

Taikoo Spirit AeroSystems Composite Co. will provide manufacturing, repair service and after-sales service of composite and metal bond material used in civil aircraft systems. Composites are materials made from two or more substances, which transform dramatically into a composite that is far better than the materials used. Composite materials offer tremendous advantages to aircraft designers. These advanced and lightweight materials are being applied to many aircraft structures to improve performance, and save fuel and maintenance costs. Today an increasing share of new commercial airplane development is devoted to composites. For example, composites will make up approximately 62% of the weight of the Boeing 787 Dreamliner and 50% of the weight of the Airbus 350, a sharp increase from the Boeing 777, which was just 12% composite material.