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Asia’s First Large-scale Aircraft Recycling Facility — China Aircraft Recycling Remanufacturing Base Commences Operation

Strengthening CALC’s Aircraft Full Life-Cycle Solutions

CALC (the “Group”, SEHK stock code: 01848), a full value-chain aircraft solutions provider for global airlines, is pleased to announce that Asia’s first large-scale aircraft recycling facility, China Aircraft Recycling Remanufacturing Base (the “Base”), owned by Aircraft Recycling International Limited (“ARI”), a member company of the Group, has formally commenced operation today.

The Base is equipped with modern facilities and devices that utilize advanced technology. These consist of various systems for aircraft maintenance, conversion, dissembling, installation of aircraft parts, as well as aircraft materials management and sales. The Base covers seven areas of business operation, including aircraft purchasing, selling, leasing, dissembling, replacing, conversion and maintenance, providing dynamic aircraft recycling solutions to airlines, MROs, lessors, as well as manufacturers and distributors of aircraft materials.

Around 200 people joined the launch ceremony, including municipal and provincial officials from Heilongjiang, together with senior representatives from ARI’s shareholders CALC, China Everbright Limited, Friedmann Pacific Asset Management Limited and Sky Cheer International. They were also joined by other leaders from various sectors in the aviation industry. During the event, participants shared their views on the prospects of and development opportunities within the aircraft recycling and remanufacturing industry.

Mr. Hao Huilong, Vice Chairman of the CPPCC Provincial Committee, said, “Heilongjiang’s solid industrial foundation, cutting-edge technology, professional experts, and favorable policies play a significant strategic role in the strategic development of the aircraft recycling industry. The Base’s commencement of operations not only capitalizes on the rapid growth of the civil aviation market and the opportunities arising from industrial consolidation, but also promotes international collaborations within the industry. Furthermore, it facilitates the development of a wide range of related sectors, such as new materials, electronics, telecommunications, energy and high-end equipment manufacturing. All in all, it helps create a new pillar for Heilongjiang’s industrial development and provide strong support to the traditional heavy industry in Northeastern China.”

China Aircraft Recycling Remanufacturing Base is located on the south side of China’s Harbin Taiping International Airport. It has a gross floor area of 300,000 sqm. With the construction of Phase I completed, the Base has had an effective handling capacity of 20 aircraft per year. It has China’s largest bonded warehouse for aircraft parts. Its hangar can hold three narrow-body aircraft simultaneously or one wide-body aircraft and one narrow-body aircraft together. When an aircraft enters the Base, it is placed under visualized management throughout all procedures, including dissembling, maintenance and recycling, free from hazards. The Base adopts optimized techniques to minimize energy consumption and execute the recycle and reuse of aircraft materials and parts to participate in the green recycling economy with added value. The Base will also improve the development of various industries in China, including aviation materials’ recycling and reuse, and aircraft parts maintenance.

Mr. LI Yuze, General Manager of China Aircraft Disassembly Centre, said, “Upon commencement of operation, the Base will complete the final link in China’s aerospace manufacturing value chain. As there are yet no comprehensive aircraft recycling and remanufacturing systems in China, aging aircraft are usually dissembled and disposed of by companies in Europe and the Americas, involving high costs and long waiting times. More and more civil aircraft in China are set to retire soon, offering extended market opportunities to the emerging aircraft recycling and remanufacturing industry. With our high standards and stringent technology requirements, the Base is set to become China’s leading platform of aging aircraft solutions with business presence in Greater China and Asia as a whole. We strive to maximize the value of used aircraft for our clients and set up a new growth pillar for the aviation industry chain.”

When the Base commences operation, the strategic portfolio of Aircraft Recycling International’s (ARI) business will also be further optimized. Its subsidiary in the US, Universal Asset Management Inc. (“UAM”), is a well-established operator with extensive experience in aviation asset management, high-tech aircraft disassembly, commercial aviation aftermarket solutions and extensive customer networks and relationships. The two companies synchronize and complement each other. By integrating the aircraft and engine leasing platform and aviation investment and financing platforms established by ARI, the two companies will work together to build the world’s most advanced aging aircraft solution platform.

With its comprehensive aging aircraft solutions, ARI will also further improve CALC’s aircraft full value-chain. CALC’s unique business model offers services covering an aircraft’s full life cycle to meet airlines’ fleet management requirements, including services for new aircraft, aging aircraft and aircraft coming to the end of their lives. By leveraging the comparative strength of their respective expertise, the synergy between CALC and ARI will optimize aircraft asset allocation effectively, as well as maximize their overall economic benefits.

Mr. CHEN Shuang, JP, Chairman of CALC, said, “Aircraft recycling is the natural extension of the aviation value chain. The Base is part of CALC’s major initiative to develop into a full value-chain aircraft solutions provider for the global aviation industry. Over the years, CALC has built an efficient capability for aircraft asset management, close partnerships with its aviation partners, and flexible and diversified financing resources. ARI’s swift and steady development in aging aircraft value chain will further enhance CALC’s diversified asset management capability, maximizing value for our aviation partners.”

Mr. Mike POON, Chief Executive Officer of ARI, said, “ARI is committed to customizing asset management solutions for aging aircraft. The operation of ARI’s aircraft recycling facility is bound to enhance our unique advantages in full-value chain by connecting the local and international aviation industries. Given the surging demand for aging aircraft management in the global aviation market, ARI will efficiently increase the residual value of aging aircraft by providing holistic solutions and completing a full value chain in each stage for aircraft, contributing to the global aviation industry’s sustainable development.”

Currently, ARI’s aircraft recycling base has been granted the Maintenance Certificate in compliance with CCAR-145-R3 required by the Civil Aviation Administration of China. The Base has been certified by the Civil Aviation Maintenance Association of China as a qualified Civil Aircraft Parts Distributor and obtained the Approval Certificate of Foreign-Funded Enterprises of the People’s Republic of China issued by the PRC Ministry of Commerce.