Boeing will complete the first-phase construction of its aircraft maintenance, repair and overhaul (MRO) facilities in Shanghai in October as scheduled despite the sluggish aviation market, the US company said yesterday.

But the sharp drop in freight traffic as a result of declining world trade has forced Boeing to slow down its plans to perform passenger-to-freighter conversion at the factory.

The factory, Boeing Shanghai Aviation Services Co, was reportedly planned as a major base for Boeing to convert B767-300 passenger jets into freighters.

"The economic downturn has slowed the demand for freighters. Getting into the business where there is little demand will be difficult," said James Brunke, CEO of Boeing Shanghai Aviation Services Co.

International freight traffic started its decline in June 2008, before passenger markets were hit. Cargo traffic plunged 21.4 percent year-on-year in March, which was the fourth consecutive month that international cargo demand was over 20 percent below the 2008 level, according to statistics from the International Air Transport Association (IATA).

Boeing Shanghai Aviation Services Co was launched in 2006. Boeing holds a 60-percent-stake in the company, while Shanghai Airport Authority and Shanghai Airlines hold 25 and 15 percent stakes respectively. It is the first time that Boeing has taken a controlling share in an MRO joint venture.

The company leases a hangar from Shanghai Airlines to perform line maintenance, heavy maintenance checks and borescope services for five airlines. Its own hangar located at the Shanghai Pudong International Airport will be completed in October and can accommodate two wide-body aircraft simultaneously.

"I do believe China is still a viable market. Regardless of what the economic crisis is, it is still important for us to complete the hangar, to develop capabilities and to increase our staff numbers," Brunke said.

The company has 350 employees and it plans to employ over 800 people in the future.

Shanghai Aircraft Manufacturing Factory (SAMF) yesterday delivered the 1,500th shipset of B737-NG horizontal stabilizers to Boeing.

Horizontal stabilizers are placed at the rear of an aircraft and provide stability while the aircraft is flying straight.

SAMF signed a follow-on contract in April last year to supply another 1,400 shipsets to Boeing. The factory is now able to produce 24 shipsets a month.

SAMF also produces doorframes for Airbus A320 freighters.

(China Daily April 29, 2009)