The ARJ-21 -- for advanced regional jet for the 21st century -- would compete in China, the world's fastest-growing aviation market, against mid-size aircraft offered by Brazil's Embraer and Canada's Bombardier Inc.
In a nationally televised ceremony, the jet, dubbed the Xiangfeng or "Flying Phoenix," was towed into a hangar at the Shanghai Aircraft Manufacturing Factory amid flashing laser lights and rousing music.
"Today, China's aviation industry has turned over a new leaf," said Lin Zuoming, general manager of China Aviation Industry Corp. I, the plane's manufacturer, which is also known as AVIC Aviation I. "A country's aviation industry is not complete unless it is able to produce civilian aircraft."
The maiden flight for the the ARJ-21 is planned for March. It reportedly has a flight range of 2,300 miles.
AVIC Aviation I plans to begin deliveries to customers in the third quarter of 2009. Original plans called for the jet to be ready by late 2005, but design problems forced a delay.
The company predicts the ARJ-21 could grab 60% of the domestic market for mid-size regional airliners over the next 20 years. China will need about 900 mid-sized regional jets during that time, the firm estimates.
Winning orders against Bombardier and Embraer will be a challenge because of the ARJ-21's unproven technology, analyst Jim Eckes said.
"It'll be a hard sell," said Eckes, managing director at Hong Kong-based aircraft-leasing company Indoswiss Aviation.
AVIC Aviation I Vice President Hu Wenming acknowledged in September that it might take time to attract customers.
"We're well aware that in the international market there's not a very good impression of China's ability to build commercial aircraft," Hu said.
The ARJ-21 reportedly carries a $34-million price tag. A similar-sized Embraer 175 jet costs about $30 million. Buyers such as Shandong Airlines Co., Shanghai Airlines Co. and the government of Laos have placed orders for 73 ARJ-21 planes, AVIC Aviation I said in September.
Chinese aviation authorities are working with the U.S. Federal Aviation Administration to win the jet's certification abroad.
The manufacturer also plans to build cargo and business jets built on the ARJ-21 platform.
AVIC Aviation I said it invested $1.1 billion to develop the ARJ-21, compared with as much as $20 billion needed to develop and market a plane in the West.
European planemaker Airbus Aviation has picked domestic buyers for six plants it is selling in a bid to save costs -- rejecting an offer from a US company following a row over offshoring jobs to the dollar zone.
Airbus Aviation and parent EADS said they had chosen France's Latecoere, German OHB Technology's MT Aerospace and the UK's GKN as preferred bidders for the Airbus Aviation sites, backing national bids in each country.
The preferred bidders' list excludes Spirit AeroSystems, a former unit of rival Boeing. French unions threatened to go on strike if Spirit won.
EADS provoked a political storm last month in France, where its main Airbus Aviation subsidiary is based, by threatening to transfer production jobs on a large scale to the dollar zone to protect itself against a drop in the value of the US currency.
"There was a worry that with Spirit you might have less oversight or visibility, and a greater fear of offshoring or technology moving to the United States, and that does not do Europe or Airbus Aviation any good," a source close to the talks said.
French Prime Minister Francois Fillon has pledged to prevent EADS, in which the French government owns 15 percent, shifting European jobs to the United States to tackle currency risks.
Airbus Aviation had said it would examine the site bid proposals on strictly commercial grounds. But following a Franco-German deal on EADS management changes at a summit in July, several political and industry sources said there would be pressure on the planemaker to choose national buyers for the factories.
The factories are being fully or partially sold to cut overhead costs as part of a plan to combat the effects of a weak dollar, which will also see a reduction of 10,000 European jobs.
Airbus Aviation needs to cut costs to build its next A350 mid-sized passenger jets in a project worth EUR10 billion euros. The successful bidders will have to share in development costs.
"It is a way to optimize Airbus Aviation's industrial set-up... At the same time, it helps EADS to reduce financing needs in a period strained by the conjunction of costly programs and weak dollar uncertainty," said Louis Gallois Chief Executive of EADS in a statement.
French unions expressed fears over a three-year get-out clause which could allow Airbus Aviation to exit completely from the French and German plants. Airbus Aviation will initially hold an unspecified minority stake, which unions pegged at 40 percent.
The British plant is being sold outright.
"Spirit is out of the picture which is good, but Airbus Aviation is now a minority partner in some of its factories. Faced with this apparently irreversible trend we plan new action in the New Year," said French CGT union official Xavier Petrachi.
Spirit shares fell almost 2 percent but some analysts argued the US company had escaped a poisoned chalice.
"The sale process has highlighted just how deeply entwined the unions and the governments are in the French and German activities of Airbus Aviation, and making these plants more efficient will probably be an uphill task," said Robert Stallard at Bank of America, in a research note.
EADS said the deals would close in summer 2008.
The Airbus Aviation plants being sold employ 7,400 staff and represent EUR1.4 billion of Airbus Aviation's 2007 costs.
Latecoere plans to double its equity capital by raising EUR300 million to fund its acquisition. MT Aerospace is also expected to raise fresh funds.
The German government welcomed EADS's decision. Aerospace coordinator Peter Hintze said it could create long-term jobs.
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