Chinese Aircraft Maker Gets First Orders (BA, EADSY, GE, AIRYY, ZNH, CEA, BDRBF, ERJ)

It’s probably too early to declare that there’s a new sheriff in town, but it’s not too early to keep an eye on a new Chinese aircraft maker. Commercial Aircraft Corp. of China, known as Comac, today announced orders for 100 passenger planes at an air show in southern China.

Comac was founded just two years ago and these are the first orders for its C919 passenger plane. The question, of course, is how big a threat Comac will become to industry leaders Boeing Co. (NYSE: BA) and Europe’s EADS (OTC: EADSY), owner of the Airbus line.
Orders for the new planes came from General Electric Co.’s (NYSE: GE) leasing group and China’s three largest airlines: Air China Ltd. (OTC: AIRYY), China Southern Airlines Co. (NYSE: ZNH), and China Eastern Airlines Corp. (NYSE: CEA). Two other Chinese companies also ordered planes.
The C919 is scheduled for its first flight to take place in 2014, with deliveries following in 2016. The plane carries 166 passengers, and is expected to compete with Boeing’s 737 and the Airbus A320, according to Bloomberg.
Comac noted that China will need to buy 4,265 new passenger planes by 2030 in a domestic market that could be worth $480 billion. Comac said it expects to sell in excess of 2,000 C919s over the next 20 years.
Chinese air carriers expect to receive 112 Airbus planes this year and 71 Boeing planes, representing some 22% of Airbus’s total production and 15% of Boeing’s. Airbus received an order for 102 planes from Chinese companies earlier this month, including 50 A320s. Boeing has said it has 737 plane orders from Chinese airlines this year.
Canada’s Bombardier Inc. (OTC: BDRBF) plans to deliver a similar-sized plane in 2013, and Brazil’s Empresa Brasileira de Aeronautica SA, known as Embraer (NYSE: ERJ) is considering entering the market as well.
Both Boeing and Airbus say they welcome the competition, but that’s probably because they reckon that it will take Comac at least twice as long to deliver the planes as the company now plans. After all, that’s how Boeing and Airbus do it.
Paul Ausick