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Will the New Chinese Passenger Jet Hurt Boeing?

After a thirty year hiatus China is again going to try to enter the large passenger jet market. According to CNN China has just rolled out a new passenger jet. Will the new Chinese passenger jet hurt Boeing and Airbus?

Amid much fanfare on live national television, China on Monday rolled its first homegrown large passenger jet off the production line in Shanghai, vowing to challenge the dominance of Airbus and Boeing in the global commercial aviation market.

At the ceremony, a shiny C919 — sporting a largely white fuselage with a blue wavy stripe and a green tail — was towed beneath a banner with the phrase “a dream takes off” and past a huge Chinese national flag.

The C919 – a twin-engine, narrow-body aircraft seating up to 174 people – is similar in size to the Airbus 320 and Boeing 737 series of jets, long the workhorses for airlines around the world.

With a flying range of up to 5,555 kilometers (3,451 miles), it is designed to compete head-to-head with its Airbus and Boeing rivals, and said to easily cover popular business and leisure routes from China such as Shanghai to Singapore and Beijing to Bangkok.

Despite the understandable hype over the high tech 787 Dreamliner the best-selling large passenger plane ever is the Boeing 737. This is the niche that the Chinese are targeting.

Boeing 737 and Airbus A320

Just last year Bloomberg Business noted that Boeing had produced its 8,000th 737. Airbus has produced slightly over 8,000 airplanes in its entire existence and 6,000 are the A320, its competitor to the 737. Besides having delivered more than 8,000 737s Boeing has another 5,000 on order. Boeing has seen great profits this year based on strong commercial plane sales according to DW.

US aerospace giant Boeing reported Wednesday that it delivered 184 airliners between January and March 2015, up from 161 planes in the same period a year ago. The Chicago-based plane maker reported especially strong sales for its venerable 737 jet that accounted for two-thirds of the first-quarter deliveries.

As a result of higher commercial aircraft deliveries, revenue increased 8 percent from a year ago to $22.15 billion (20.9 billion euros). Net profit also soared, rising 38 percent to $1.34 billion, up from $965 million in the 2014 first quarter.

Excluding $113 million in pension expenses, adjusted earnings reached $1.97 per share, Boeing said, which was well above Wall Street’s consensus estimate of $1.81.

“The strong operational and financial performance reinforces our ability to continue providing competitive returns for our shareholders while investing in technology and our people,” said Boeing chairman and chief executive Jim McNerney in a statement.

Interestingly China just signed a $38 billion order for Boeing jets. Bloomberg reports that the agreement includes 190 737s, 50 wide body jets for Chinese airlines and 60 single aisle planes for leasing companies.

Boeing and Airbus were poised to reap a haul of aircraft orders from Chinese airlines as central planners plot growth through 2020. China is Boeing’s largest international market, accounting for about a quarter of the company’s deliveries this year. Boeing is also exploring whether to open a factory in China to complete work on its top-selling 737-model jetliners, a person familiar with the matter said earlier this month.

The country is poised to displace the U.S. as the world’s biggest aircraft and travel market within two decades, according to Boeing. It predicts airlines will need to add 6,330 new planes valued at $950 billion by 2034 to keep pace with travel growth.

Will the new Chinese passenger jet hurt Boeing? It would appear that there not be any short term damage. But, if the Chinese can produce jets of decent quality for their domestic market it will cut into Boeing and Airbus sales. On the other hand the Chinese market will expand substantially providing room for growth for all aircraft makers.

Will the New Chinese Passenger Jet Hurt Boeing? PPT





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