Is China's Model Airplane Boeing's Next Headache?

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This is going to sound like more bad news for Boeing (NYSE: BA  ) , but bear with me, it gets better. On Monday, China debuted its C919 passenger aircraft at the Zhuhai Airshow. Rivaling the Airbus A320, and Boeing's 737, the C919 threatens to steal market share from a market worth $480 billion in sales over the next 20 years.

Manufactured by Commercial Aircraft Corp. ("Comac," to its friends), the C919 is the same plane we told you about a year ago in Boeing's Chinese Challenge. It's a 160-to-190-seater that China says will cost 10% less to operate than even Boeing's uber-successful redesigned 737, featuring parts supplied by A-list American manufacturers like General Electric (NYSE: GE  ) and Eaton Corp. (NYSE: ETN  ) .

According to Comac, it could collect hundreds of orders for the C919 over the next six days. Prime targets include China Eastern Airlines (NYSE: CEA  ) , China Southern Airlines, and Air China (natch). But Comac's also hoping to entice partner GE to buy a few dozen planes for its aircraft leasing arm.

In conjunction with China's Aviation Industry Corp. (AVIC) ARJ-21, the C919 forms a two-pronged attack on the West's airplane powers. While Comac tackles the big-plane market, AVIC is hitting 'em low, aiming the ARJ-21 at smaller business-jet makers like General Dynamics (NYSE: GD  ) , Textron (NYSE: TXT  ) , and Embraer (NYSE: ERJ  ) .

Somebody pass the epoxy
"Great!," you grumble. "First melting electrical panels. Now this!" But not so fast.

For all the sound, fury, and sales hoopla, it turns out the C919 isn't really an "airplane" at all. Why, it's not even a complete model airplane. According to those who've seen the "plane," all Comac was able to cobble together in time for the airshow was a full-scale model of "the front half of the fuselage, with a cockpit simulator."

Which I have to say, doesn't sound quite as scary for Boeing investors. Experts today believe the C919 won't make its first test flight before 2014 at the earliest, with actual deliveries not slated to begin before 2016. Plus, seeing as AVIC's ARJ-21 is two years overdue, and Boeing's 787 might be three years tardy before its first delivery, it's clear that these things can take longer than you expect.

Don't discount the threat, but don't make a mountain out of a model airplane, either.

General Dynamics is a Motley Fool Inside Value pick and Embraer is a Motley Fool Stock Advisor recommendation, but Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.

Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Read/Post Comments (6) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 16, 2010, at 1:44 AM, jrusso9722 wrote:

    I'll bet that the interiors contain poisonous materials, quality is suspect. Chinese will cheat on most everything.

  • Report this Comment On November 16, 2010, at 8:23 AM, binkerman wrote:

    What aweful racist comments above. The Chinese invented paper making, insulin, and most tons of other technologies.

    The ARJ-21 is a beautiful plane. Most sbcontractors are American companies. The interior is being done by American subcontractors - so you are basically bashing hardworking Americans.

    Racism is bad. Stop it.

  • Report this Comment On November 22, 2010, at 1:03 PM, privatejet wrote:

    To fly to any destination on your prefer timing, prefer a private jet charter. Which also allows you to travel safer and quicker too.

  • Report this Comment On December 07, 2010, at 4:48 PM, exeter17 wrote:

    Binkerman he has a point. American companies don't paint toys wit led based paint. They don't use contaminated water in personal care products either.

    We have clean air and water acts over here.China burns coal and their cars have to meet 1984 series emissions.

    I don't think its racist to mention facts on poison.

  • Report this Comment On June 13, 2012, at 6:36 AM, planeprices wrote:

    Good article, thanks for sharing, if you are interested in flight and you want to check prices, take a lokk here

  • Report this Comment On April 25, 2013, at 10:18 AM, vne101 wrote:

    It's unlikely that the plane would steal a big enough market share from Boeing or Airbus to make a difference really. Here are some costs of different aircraft and how much they cost to charter:

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