In a Pickle – Cirrus Aircraft
Cirrus Aircraft, a private plane manufacturer known for its All-American timeline, fails to mention its ownership by a sanctioned Chinese military manufacturer, Aviation Industry Corp. of China (AVIC). AVIC, a major military contractor subject to US sanctions, acquired Cirrus over a decade ago. Although Cirrus primarily produces single-engine planes for private citizens and charter services, its technology and manufacturing expertise could potentially be valuable to the People’s Liberation Army (PLA), according to experts. Despite deep tensions between the US and China, Cirrus has continued to expand, including filing for an IPO in Hong Kong. While Cirrus has not been accused of any wrongdoing, AVIC has faced scrutiny as a potential national security threat. The US government has imposed sanctions to hinder the growth of companies linked to China’s military. Despite this, Cirrus and other AVIC-affiliated companies in the US have experienced growth and received praise from politicians. The complex application of sanctions and the concerns surrounding Chinese-owned companies in the US add further complexity to the situation. The debate over sanctions effectiveness, along with bipartisan scrutiny of Chinese investments, continues amidst the Biden administration’s efforts to increase restrictions on technology exports to China.
Cirrus, with revenue of about $890 million, is a small part of AVIC’s larger empire, which includes commercial aircraft and numerous affiliates. Cirrus has emphasised its compliance with US sanctions and export controls. AVIC’s ownership raises questions about potential connections and collaboration within the broader AVIC empire. While AVIC-owned subsidiaries have been subjected to restrictions, Cirrus and other AVIC companies have avoided the most severe sanctions. Experts suggest that Cirrus’ expertise in general aviation aircraft could have some dual-use purposes, although there is a clear distinction between civilian planes and military weaponry. Policymakers face limited options for addressing AVIC’s presence in the US, such as forcing divestment or imposing more severe sanctions, but such measures would be extreme and require careful consideration. What do you think about cases like Cirrus? And what do they affect companies in the aviation and defence sectors?
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
