While many in the industry view the COMAC 919 as China’s aerospace learning vehicle that will enable it to enter the modern airliner industry, many others are less pessimistic regarding its future.  With a veritable plethora of western suppliers on the C919 program, from the CFM LEAP engines to Honeywell, Parker, Liebherr, Eaton, Monogram, Labinal and other well known names that also serve Boeing, Airbus, Bombardier and Embraer, the C919 has a top tier supply chain.

Add Bombardier’s partnership in a number of areas, including joint worldwide customer support, and the odds of success for the C919 in the near term begins to look better than it did just a couple of years ago.

Of course, the proof will be a certified airplane with strong economics, and how the Chinese minimize “weight creep” that seems to accompany every new aircraft program.  If the C919 can come in near to spec, it should have better economics than the 737NG and A320ceo, and be just shy of performance numbers for 737 Max and A320neo, but with much lower capital costs.

Back in the 1970s, there was similar skepticism whether an French-German-British consortium named Airbus would become a threat to Boeing and Douglas. Some entrenched folks in the industry guessed wrong.  We see some of the same hubris being applied to China today, doubting whether they will succeed in the short-term, while conceding that 20 years from now China will be a competitor.   Our advice is to be careful, as China’s ambition is to be world class and one of  the ABC competitors (Airbus-Boeing-COMAC). China’s aerospace industry success is firmly entrenched as a national goal.  They have the funding, they have willing and able Western partners, and now need to execute on their business plan.  While they may stumble, as Boeing and Airbus have in delivering programs on time, they have the resources to succeed.

At the recent Zhuhai Air Show, COMAC announced additional orders for C919, including its first potential order from the US by the reincarnation of Eastern Airlines, which is seeking 50 aircraft.  In addition to the new Eastern, GECAS ordered 10 more, while Hebei Airlines and Joy Air each ordered 20.

The order book to date includes 380 aircraft from 15 customers, with GECAS as the major international (non Chinese) customer.  Discussions are also underway with European LCC Ryanair and British Airways regarding the C919 in addition to the tentative deal with Eastern.  Turning Western interest into orders would be a significant coup for COMAC, and an element of national prestige for China.  If you thought Boeing and Airbus offered aggressive launch customer discounts and financing, think again.

Is there room for the C919?  China wants the C919 to capture half the home market. Boeing and Airbus are essentially sold out for narrow body aircraft deliveries through 2020.  Orders for neo and MAX continue at a record pace, and delivery slots are unavailable without production increases, which are difficult to accomplish because of the requirements placed on an already stretched supply chain.  The lead time for increasing production rates, with so many components outsourced, has stretched in recent years from a few months to between 18-24 months today at many suppliers.

Excess capacity and excess inventories have long been removed from the supply chain, and the constraints on growth for Airbus and Boeing may leave COMAC with the only available delivery slots for new aircraft above 150 seats 5-6 years from now.  Could Airbus and Boeing being too successful create a strategic opportunity for China?

Airbus and Boeing can attack Bombardier’s CSeries aggressively without much threat of retaliation from Canada, and temporarily hold down sales.  But could they utilize the same aggressive pricing against the Chinese?  The answer is no, for several reasons.  First, the Chinese airlines will be mandated to purchase the local product.  Second, the C919 will simply cost less, and COMAC will be willing to undercut Boeing and Airbus, as necessary, to succeed.  Third, with a strategic goal to penetrate western airlines, COMAC will make attractive offers in order to buy  market share.

Can COMAC pull it off?  Yes, we believe they will produce a good (perhaps not great) airplane in the C919.  Will they be on time?  Likely not, but then again neither are Airbus, Boeing, or Bombardier these days.  Will they be able to gain market share?  You bet, especially in China, but they will secure several key non Chinese orders.  Will COMAC become the ABC competitor?  With 380 orders, they are well on their way.

Bottom Line:  Those skeptical on C919 fail to recognize the subsystem integration roles being provided by Western suppliers with experience, and their experience on other programs.  Yes, China will be learning with this airplane.  But they will pull it off, and before the end of this decade will become a force to be reckoned with.