Can Boeing Keep the Competition at Bay?

Boeing (NYSE: BA  ) is one of the world's only two manufacturers of large commercial jets, along with Europe's Airbus. Commercial jets represent a valuable and fast-growing market, and one that Boeing has made important investments to capture. Boeing believes that spending over a decade and over $30 billion in research and development for the sleek, modern 787 Dreamliner jet plane has positioned it to capitalize on the future of air travel.

While Boeing and Airbus have captured the market on large planes today, several smaller plane makers have already started to edge into the smaller regional jet market. What's more of a concern for Boeing investors, some of these competitors have big ambitions to break into the duopoly on larger planes that Boeing and Airbus currently enjoy.

Today, you can find out more about this development with a sneak peak of The Motley Fool's premium research report on Boeing. In the full report, you'll find out whether Boeing is a buy or a sell with our research and analysis on the risks and opportunities facing Boeing, as well as three key areas to watch that are critical to Boeing's long-term success and more. Here is a taste:

New competition. By outsourcing complex work to suppliers, Boeing and Airbus may be giving the tools of their own destruction to their would-be competitors. When planes were built completely in-house, it was easy for Boeing to keep a strong technological lead over potential competitors, but the globalization of production has allowed technology to diffuse widely. Now, the Boeing-Airbus duopoly looks shakier than ever.

Canada's Bombardier and Brazil's Embraer (NYSE: ERJ  ) have long expertise developing regional jets that have fewer than 100 seats, but both have recently pushed into the 100-200 seat market, competing directly with Boeing's 737 series. This market also is being contested by state-backed companies in Russia and China, which have little experience but strong political backing. Aviation analyst Ernest Arvai has noted that "the 100-200 seat market shared by Airbus and Boeing with an 88% market share today could see that share fall to nearly 40% if all of the new competitors are successful and achieve their market goals." Speaking to the Aviation Club of the U.K. in June 2012, Boeing Commercial Aviation President Jim Albaugh seemed to agree that the duopoly's days were numbered: "I don't believe all of them are going to be successful. My guess is one of them will emerge and become a very good competitor for us."

Of particular concern is the Commercial Aircraft Corporation of China (COMAC), which Albaugh designated as "the biggest threat to Boeing and Airbus." The company is working in partnership with many of the same suppliers that Boeing has outsourced design to, and currently plans to launch its C919 narrow-body jet in 2014. COMAC is young, but it has strong state support. China's massive outlays into high-speed rail show that when the country is committed to industry leadership, it can marshal incredible resources to achieve that goal. If COMAC's products can be delivered on time and operated safely, Boeing could be shut out of China, the world's largest aviation growth market, entirely.

We hope you enjoyed this sample of our new premium research report on Boeing, which also includes a breakdown of the most important areas investors need to watch, an analysis of the risks facing Boeing, and three key reasons to buy or sell the stock. To gain access to the complete report and a full year of analyst updates, click here and keep reading today.


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