China Challenges Boeing, Airbus Wide-Body Market

China’s Commercial Aircraft Corp. of China, better known as Comac, and Russia’s United Aircraft Corp. (UAC) announced a formal agreement Monday in Shanghai to develop, build and sell a wide-body (dual aisle) passenger jet that will compete with existing planes from Boeing Co. (NYSE: BA) and Airbus. Comac recently completed the first test flight of its single-aisle C919 jet.

The two companies unveiled their plans more than two years ago to build a wide-body plane that can carry 280 passengers up to 7,500 nautical miles. The original plan was to have the plane ready for test flights in 2022 and delivery in 2025. That timetable has now been pushed out three years, with the first flight in 2025 and first delivery in 2028.

Boeing has estimated that the wide-body market will total 9,100 new aircraft for the 20-year period to 2035. Airbus has estimated a total market of 7,500 for the same period.

Regardless of which estimate you choose to believe, that’s a $2 trillion market over the next two decades.

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Boeing has held a solid edge in the wide-body market for a long time, but Airbus has begun to make inroads with its A330 and A350. Boeing’s 777, 777X and 787 have been the top sellers. The Comac/UAC wide-body, called the C929, is aiming to take 10% of the market for the A330 and Boeing 787 by offering a plane with a 10% to 15% better cost structure.

The C929 may have timing on its side. By the time the plane is ready for test flights, the slack period for aircraft sales may be over, or nearly so. If that turns out to be the case, the plane could make some noise in the market.

If the market is still weak, well, Boeing and Airbus will be just that much weaker and price competition will be fierce. China would love to fight either or both competitors on price. That’s a fight Comac/UAC probably believes it can win.

Boeing’s stock traded about flat in the noon hour Tuesday, down just 0.03% at $183.62, in a 52-week range of $122.35 to $187.21. The stock’s consensus 12-month price target is $188.62.

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