China Creates Competition For Airbus And Boeing

May 11, 2008 by Douglas A. McIntyre

Neither Airbus nor Boeing (BA) seem to be able to get their newest airplanes to customers on time. The Airbus super-jumbo A380 has frustrated the company’s customers for the better part of two years. The plane may be big and efficient, but if it never makes it into service, what difference does it make?

Boeing (BA) has suffered repeated sefl-inflicted humiliation at it continues to push back the final delivery date of the 787 Dreamliner. The chance of a large strike at the company could make the problems worse and Boeing’s earnings are not immune from the tardiness. Several large airlines are also asking for compensation because they won’t have their Dreamliners on contracted delivery dates.

China may end up capitalizing on all of this and begin to push the two international airplane companies out of it market, which will becomes the world’s largest. According to Reuters, "Europe’s Airbus has forecast that China’s domestic market will increase fivefold by 2026."

The central goverment in the world’s most populated country has now set up its own firm to build and market large commercial planes. China Commercial Aircraft Co has been established to make aircraft with 150 seats and more.

China will not be able to get larger jets into production anytime soon. But, if it can have deliveries scheduled within the next decade it could significantly vex the efforts of Boeing and Airbus in the country. If the new Chinese company can deliver just one plane on time, it will have a big head start.

Douglas A. McIntyre