Hong Kong Aircraft Engineering Co. Ltd. (HAECO), a Hong Kong-listed company engaged in the overhaul, modification, and maintenance of commercial aircraft, has signed an agreement to set up a US$42 million joint venture with mainland partners at Goaqi International Airport in Xiamen to provide landing gear repair and overhaul services.

The partners will build a facility to service aircraft landing gear systems, and will initially focus on Boeing 737, 747, and 777 jets. The service center is expected to be completed by mid-2008.

HAECO's partners in the venture include Taikoo (Xiamen) Aircraft Engineering, Shaanxi Liaoyuan Hydraulic System, Xiamen Aviation Industries, Xian Aircraft International, and Cathay Pacific Airways Ltd.

This new deal comes on the back of HAECO announcing plans to build its third and fourth hangars at Hong Kong International Airport last month.

The HAECO management justified the building of the new hangars in Hong Kong and Xiamen by saying that existing maintenance facilities in the two cities are fully utilized.

The company, which is owned by both Swire Pacific Ltd. and Cathay Pacific, last month reported a 38% rise in its profit for the first half of 2006 to HK$398 million due to heavy maintenance operations in Hong Kong and Xiamen.

HAECO's second hangar at the Hong Kong International Airport is expected to open at the end of this year and the company has reached an agreement with the Hong Kong Airport Authority to lease additional land and extend its franchise from 2031 to 2036.

The agreement also allows the company to build an additional double-layer hangar that will begin operations in the first half of 2009.