China Faces Setback in Bid to Challenge Boeing, Airbus woth delivery of China’s first locally produced commercial jetliner delayed to 2017 at the earliest

August 6, 2013, 7:33 a.m. ET

China Faces Setback in Bid to Challenge Boeing, Airbus

State-Owned Comac to Delay Delivery of C919 Jet


HONG KONG—Delivery of China’s first locally produced commercial jetliner will likely be delayed to 2017 at the earliest, a setback in the country’s bid to become a global force in the aerospace industry. The C919 jet, under development by state-owned Commercial Aircraft Corp. of China Ltd., or Comac, is the nation’s multibillion-dollar gamble against Airbus and BoeingCo.’s BA -0.43% aviation duopoly. But early-stage design difficulties have forced Comac to consider revising the production schedule for the plane, people familiar with the situation said.“It will take 90 to 96 months [from the program’s start in 2008] for Comac to build a new plane, so realistically the maiden flight will take off in late 2015 with first delivery starting two to three years afterward,” said one of the people speaking on condition of anonymity. Comac had earlier aimed for the C919 to make its first flight in 2014, with customer deliveries beginning 2016.

Chinese carriers remain major buyers of Boeing and Airbus jets, as the country’s economic prosperity drives travel demand. Comac, established in 2008 with registered capital of 19 billion Chinese yuan ($3.1 billion), has large state-owned backers including the Aviation Industry Corp. of China, Aluminum Corp. of China, Baosteel Group, and Sinochem Group. But as the main vehicle implementing China’s production program for large passenger planes, it remains untested and has formidable competition in Airbus and Boeing, which dominate the commercial jet market with the B737 and the A320.

“Production delays aren’t unusual, particularly for a new aircraft maker such as Comac,” said another person familiar with the matter.

“We’re nowhere near the level of rival aircraft makers such as Airbus and Boeing. They’re well-established while Comac has just started to construct its own new plane from scratch,” the person added.

So far, Comac has received orders for 380 C919 jets, mostly from domestic airlines and aircraft leasing firms. GE Capital Aviation Services, the world’s biggest aircraft lessor by fleet value and the aircraft-financing arm of U.S.-based General Electric Co., is the only foreign buyer with an order for 20 jets.

Comac hasn’t disclosed the list price of the jet. It unveiled a prototype of the 150-seat aircraft in 2010, but has yet to build the actual plane.

Comac’s experience in producing a smaller regional jet, the ARJ21, illustrates the difficulties aircraft makers face in securing tests and approvals before they can move on to commercial sales. The 78-to-90-seat turbofan short- and medium-range jet, which had its maiden flight in 2008, is expected to complete final certification in 2014 before its launch customer Chengdu Airlines operates the jet, four years behind its 2010 delivery schedule.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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