October 26, 2018 / 4:57 PM / a month ago

Leonardo signs framework agreement to join CR929 jet project

ROME, Oct 26 (Reuters) - Italy’s Leonardo said on Friday it had signed a framework agreement with China’s Kangde Investment Group to join the project of a new wide-body jet, a move aimed at increasing the presence of the state-controlled defence company in Asia.

The agreement will establish a joint venture - Kangde Marco Polo Aerostructures Jiangsu - which will be responsible for the development, production and assembly of components for the CR929 airplane.

The programme for the long-range aircraft was launched last year by Commercial Aircraft Corporation of China (COMAC) and Russia’s United Aircraft Corporation (UAC).

The strategic jet project is a Russian and Chinese effort to compete in the lucrative wide-body segment that is now divided between Europe’s Airbus and U.S. rival Boeing.

The maiden flight for the venture’s new plane is scheduled for 2023, with first delivery expected two years later.

The Sino-Russian partnership said in May that it had received proposals from seven foreign and local firms to supply the jet’s engine.

“As announced in our industrial plan, (Leonardo is) broadening the core mission of the Aerostructures Division ... and growing our business in China, where we are already present in the helicopter and air traffic control sectors,” Leonardo’s Chief Executive Alessandro Profumo said in a statement.

Leonardo is the 10th largest company by revenue in the global defence sector.

Leonardo’s Pomigliano d’Arco production site, close to the southern city of Naples, will play a key role in the construction of the components.

The company did not disclose the financial details of the agreement but the deal is expected to lift the sales of its Aerostructures unit, which accounted for just over a quarter of its 11.5 billion euro ($13.12 billion) revenues last year.

After tidying its accounts and cutting its debt under the previous CEO, Leonardo is now looking to expand its business abroad, particularly in high spending markets like China.

In its 2018-2022 four-year plan, published in January, Leonardo said it expected new orders for 70 billion euros and to return to double-digit profitability by 2020.

Leonardo is also looking at potential opportunities of collaboration in the Chinese space industry, the statement added. ($1 = 0.8767 euros) (Reporting by Giulia Segreti; Editing by Emelia Sithole-Matarise)

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