China's C919 Poses Major Threat To Boeing's Dominance

Recently Boeing's (BA) reported earnings that smashed expectations and its guidance came in far higher than consensus.Boeing share price then soared taking out its all-time high as annual sales topped $100 billion for the first time in its 102-year history. Many analysts claimed the American airplane maker was set for even more gains in 2019 after bouncing back from production snarls with its 737 jetliners but with their airplanes falling from the sky everything rapidly changed.

The sales of jetliners are very important because they play into the bigger picture of world trade and trade imbalances and China is a massive battleground for Boeing and Airbus (EADSY) because of the sheer size of their market. China's air travel market is expected to surpass the United States by 2024, according to the International Air Transport Association which estimates that 927 million people will travel to or from China by air in 2025. This compares to the 904 million passengers to and from the United States. Translate that into actual orders, and you’re looking at something on the order of 2,800 new planes with a book value of $329 billion. Boeing has projected it could sell China 6,330 planes worth $950 billion during the next 20 years. Nearly three-quarters of the planes for its civilian airlines will be single-aisle with about 700 wide-bodies. Boeing wants to sell China as many of those airplanes as it can and beat out its arch-rival, Airbus. 

Unfortunately, Airbus won't be the only rival Boeing has to contend with because China is rapidly pushing its own aviation sector forward. The C919, being built by Chinese state-owned aviation manufacturer Commercial Aircraft Corp of China (COMAC), is a perfect example of Chinese intentions and should send fear into the hearts of Americans. COMAC has spent 11 years and $6.5 billion developing the C919, which is seen as China's answer to the Boeing 737 and Airbus 320.The C-919 has a flight range of up to 3,451 miles (5,555 kilometers), which means it can fly non-stop from Shanghai to Jakarta or from Paris to Montreal and it can fit 158 to 168 seats. This hits right at the heart of its competitors, different models of Boeing 737 can seat 85 to 215 passengers; while an A320 can accommodate 100 to 240 people.

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Duke Peters 3 months ago Member's comment

How safe would a plane made in China be? Give me good ol' USA any day.

Gary Anderson 3 months ago Contributor's comment

We have a good safety record. But China will become the most powerful economy in the world and the people will demand safety.

Jack S. Chen 3 months ago Member's comment

If the government is behind it, you can expect it to be pretty formidable competition.

Gary Anderson 3 months ago Contributor's comment

China has historically been self sufficient. If you want to shun free trade, author, why don't you summon our multinationals home? They can sell their wares at inflated prices to tapped out US consumers.

Bill Johnson 3 months ago Member's comment

I agree. When push comes to shove, we need China for cheap products and labor more than they need us. Any American products they want, they can simply copy. And yes, while many Chinese factories cut corners to save on costs, they can produce products of the highest quality when they want to. I suspect planes will fall into the latter category.