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

At Datenna, our China experts continuously track and conduct detailed investigations into joint ventures 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.

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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 benefited from the incentives offered by local authorities to companies establishing 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, where demand for leased commercial aircraft engines has grown rapidly. By the end of 2021, 62% of China's 4,054 registered passenger planes were leased — a significant increase from 35% in 2010. Generally, airline companies prefer to lease rather than buy new aircraft, as it provides greater 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 manufacturers, and repairs aircraft engines. Established more than 30 years ago by Charles F. Willis, it holds the largest and most diverse engine portfolio in the industry, surpassing $1 billion in total assets. The company operates in 110 countries including China, where Willis Lease has long been a leader in engine leasing and maintenance, repair, and overhaul operations. The joint venture further strengthens these operations.

CASC and Its Links with Government Entities

The main business scope of the Chinese partner, China Aviation Supplies Co., Ltd. (CASC*), is providing supply assets to state-owned aviation enterprises and facilitating innovation 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.

CASC is engaged in several strategic partnerships. It collaborates with Air China, providing customised solutions and support systems, and has signed a long-term total component maintenance contract with Lufthansa Technik Shenzhen. Under agreements with Guangzhou Aircraft Maintenance Engineering Company Limited (GAMECO), the two companies cooperate in aviation material sharing, consumable parts supply, and component support.

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

China's Aviation Industry and National Plans

This joint venture, and more broadly the investments, MoUs, and cooperation agreements concluded in the aviation sector, connect to China's ambition to gain additional technological expertise in aviation with the ultimate goal of producing aircraft domestically. China still primarily relies on other nations for aircraft production. Under the Made in China 2025 national plan, the goal is to reduce reliance on foreign technology in aviation and help domestic companies compete at a global level — accelerating the reorganisation of state-owned enterprises to improve their competitiveness through strategic alliances and acquisitions.