Comac’s C919 officially flies commercially

Comac

Introduction

Milestone of China’s self-made large airliner

On May 28th, the C919 large aircraft of China Commercial Aircraft Corporation (Comac), which was completely independently developed by China, took the first commercial flight by China Eastern Airlines. It took off from Shanghai Hongqiao Airport and landed at Beijing Capital Airport. It spanned 1160 kilometers and lasted 2.5 hours. Completed the first commercial flight.

What is the price of the C919?

China Eastern Airlines disclosed that the catalog unit price of C919 is US$99 million each.

What are the advantages?

At the design stage, COMAC expects that the C919 will save 15% of fuel and reduce carbon emissions by 50% compared with the new generation of Boeing 737 and Airbus A320 produced at that time. It can carry 8 to 10 more passengers and have more spacious seats. However, with the two major aircraft manufacturers launching a new generation of single-aisle airliners, the advantages of saving fuel and reducing carbon emissions have been tied. COMAC expects that the competitive part of this product is mainly aimed at economy and comfort, which can be comparable to the new aircraft of its opponents.

Geopolitics

For a growing number of countries concerned that they may be impacted by the ever-expanding US sanctions regime, the C919 offers them a choice. The changing geopolitical situation could be a catalyst for the internationalization of the C919.

Aircraft models from COMAC

COMAC has the following three main aircraft types:

  • CR929: On September 29, 2017, the long-range wide-body airliner jointly developed by China and Russia was officially named CR929 in Shanghai. It adopts a dual-aisle cabin layout with a range of 12,000 kilometers and 280 seats. It can meet the requirements of the flight from Shanghai across the Pacific Ocean to the west coast of the United States. The CR929 will also have lower direct operating costs than similar models.
  • C919: The protagonist of this article is a medium-range civil airliner, aiming at the world’s main civil aviation aircraft models──single-aisle models. It can carry more than 160 to 192 passengers and has a range of more than 5,000 kilometers.
  • ARJ21: It is mainly used as a regional civil aircraft, with 78 to 90 seats, and a range of 2,225 kilometers to 3,700 kilometers. As of December 2022, nearly 100 ARJ21s have been delivered, more than 300 routes have been opened, more than 100 cities have been connected, and more than 5.6 million passengers have been safely transported; and it has been adopted by TransNusa in Indonesia.

My books about the aircraft industry

I have discussed the aircraft industry in two of my last books; the chapters are:

Potential market

Market size of global aircraft

According to the statistics of COMAC, in 2021, there will be a total of 20,563 passenger aircraft in the world, of which 3,695 are in the Chinese fleet, accounting for 18.0%. This proportion may increase to 21.1% in the next 20 years.

How many aircrafts world need annually?

In 2020, a total of 825 civil aviation aircraft of various types were delivered worldwide, of which Airbus delivered 551, accounting for 66.8%, and Boeing delivered 154, accounting for 18.7%.

Global market demand

According to the “Commercial Aircraft Corporation of China Market Forecast Annual Report”, from 2020 to 2039, more than 40,000 jetliners will be delivered worldwide, with a total value of more than 5.9 trillion US dollars. The vast majority of the market will be divided between the European Airbus and the American Boeing.

On November 7, 2022, Airbus released the latest global and Chinese market forecast from 2022 to 2041, pointing out that from 2022 to 2041, the world will need to add 39,490 new passenger and cargo aircraft.

Globally, Boeing forecasts $6.8 trillion in aircraft sales by 2038, with an additional $9.1 trillion in service demand.

Chinese market demand

Boeing predicts that China will soon become the world’s largest aviation market, requiring 8,090 new planes over the next 20 years, worth nearly $1.3 trillion based on current list prices. Maintained related services will be even larger at $1.6 trillion. Boeing expects China will need 5,960 new single-aisle aircraft by 2038, accounting for 74% of total new deliveries, while China’s wide-body fleet will require 1,780 new aircraft, tripling the size of the country’s current wide-body fleet .

Airbus announced on November 7, 2022 that the average annual growth rate of China’s air traffic volume in the next 20 years will reach 5.3%, which is significantly higher than the world average of 3.6%. Therefore, Airbus estimates that from now to 2041, the Chinese market will need 8,420 passenger and cargo aircraft, accounting for more than 20% of the global total demand.

How many orders are there for C919?

Current customer order

The C919 large aircraft has obtained airworthiness certificates from 27 countries, and received orders from more than 32 companies at home and abroad. With the verification of COMAC, there is a high probability that more countries will issue airworthiness certificates and orders in the future. According to the “2022 Shanghai Science and Technology Progress Report”, as of the end of 2022, the C919 large passenger aircraft has received a total of 1,035 orders from 32 customers, with a total value of over 700 billion yuan.

Don’t forget ARJ21

In fact, China’s ARJ21 regional aircraft has been in commercial operation for 7 years so far, and more than 100 aircraft have been delivered. It has even successfully flown overseas in Indonesia and has maintained a high utilization rate for a long time, and its working condition performance has been highly evaluated.

Need 150 deliveries annually in next 5 years

COMAC has stated that it must produce at least 150 C919s per year in the next 5 years to keep up with the current minimum order from customers.

Supply chain

COMAC’s supply chain

According to statistics, 22 provinces and cities, more than 200 enterprises, 36 colleges and universities, and hundreds of thousands of industrial personnel have participated in the development of the C919 large passenger aircraft. 16 material manufacturers and 54 standard parts manufacturers including Baosteel have become large-scale A supplier or potential supplier of an airliner program. the

The body structure of the C919 is mainly provided by related domestic companies, while the supply of parts is in the form of global bidding. The engine is provided by CFM International, a joint venture between General Motors of the United States and Safran of France. The domestic substitution rate of the C919 is not high, and key components such as avionics systems and generators still need to rely on foreign countries, which is not a big deal. the

A large aircraft involves millions of parts and components, requiring an extremely complex global supply chain as support. There is no aircraft company that can be built solely on the strength of the company itself or its own country.

Boeing’s supply chain

It is reported that Boeing (ticker: BA) has directly created more than 160,000 jobs around the world, of which about 120,000 are in the United States, and there are more than 12,000 global suppliers in more than 70 countries around the world, providing more than 600 jobs each year. billion-dollar products and services.

What is the self-made rate?

And its localization rate has also increased from the initial target of 10% to the current 60%. In fact, even for Boeing and Airbus, which have been famous for so many years, their domestic production rate is only 50% to 70%. the

Boeing aircraft, founded in 1916, has been 110 years. Many of their important components must also rely on suppliers from around the world. Airbus was established in 1970, and it has been 53 years so far, and its supply chain is also spread all over the world.

Engine

The engine currently used by the C919 is the CFM LEAP series engine, which is the same as its competitors Boeing’s 737 and Airbus’ A320-Neo.

CFM LEAP series engines are developed by CFM International, which is a joint venture company established by GE Aviation of the United States and Safran (ticker: SAFRY) of France for the development and manufacture of CFM56 series jet engines.

In the future (expected before 2025), the C919 will provide the Chinese-made CJ-1000A engine for customers to choose. This engine is the first large-bypass-ratio turbo engine made in China for civilian use. In this way, the constraints of the United States can be avoided, and the plan has also been included in the key projects of the “14th Five-Year Plan”.

Competitors

According to Flight Global statistics, among the top 100 aviation industry companies in the world (ranked by revenue) in 2021, only AVIC is on the list in Mainland China.

COMAC has only two competitors: Boeing and Airbus (ticker: EADSY), and there is no and impossible third company in the foreseeable future.

The main competitors of the C919 are Boeing 737 New Generation and Airbus A320 series.

Boeing

Boeing lost two planes in a row because of its own 737 Max design error. In addition, the United States has used all means to suppress China in all aspects. It has imposed embargoes and sanctions on 1,200 large and listed companies in China. The relationship between the two countries has broken. It has not sold any airliner to China since 2010, which is also one of the main reasons why Boeing’s revenue growth has stagnated in recent years and its stock price has not performed well.

Regarding Boeing, please refer to the description of my previous blog post: “How does Boeing, too big to fail, make money?” “

Airbus

To fight back against the United States, China began to use its great economic power to prop up Boeing’s rivals. With the deterioration of US-China relations, Airbus Europe has continued to receive a large number of orders in mainland China in recent years.

In 2019, Airbus secured a US$35 billion aircraft order from China during Chinese President Xi Jinping’s state visit to the French capital, another blow to Boeing, struggling to cope with the grounding of its best-selling model .

German Chancellor Scholtz only visited the mainland on November 4, 2022. China Aviation Materials, a state-owned enterprise in charge of purchasing aviation equipment in the mainland, announced that it had reached a purchase agreement with Airbus and signed a contract for 140 aircraft in Beijing. Procurement documents, worth about $17 billion.

At present, Airbus accounts for more than 50% of the Chinese market, and Airbus continues to be optimistic about the Chinese market in the short to medium term in the future. Airbus delivers more than 20% of its aircraft to the Chinese market every year. Since 2006, China has been the largest single market for Airbus in the world.

Presency in China market

Boeing

It is impossible for Boeing to give up China, the world’s largest civil aviation market, so it has set up overseas assembly plants in China. On December 15, 2018, the “737 Completion and Delivery Center” in Zhoushan, Zhejiang Province officially delivered the 737 MAX 8 passenger aircraft, which was received by Air China. This is also the first case! Boeing 737 deliveries are not shipped from factories in the continental United States.

Airbus

After obtaining a large number of orders from China, Airbus announced on November 9, 2022 that it will put into production the first A321 aircraft at its Asian final assembly line for A320 series aircraft in Tianjin. It is Airbus’ only assembly plant outside Europe.

After Airbus won a large order of US$37.2 billion from the mainland, it will set up another industrial chain in Chengdu in November 2022.

Large aircraft is very difficult

Japan’s Mitsubishi

Entering the aircraft manufacturing field will face huge barriers. In February of this year, Japan’s Mitsubishi Heavy Industries Co., Ltd. (ticker: MHVYF) officially announced that it would abandon the 15-year regional airliner project, citing a lack of engineers and potential partner airlines, and its design failing to meet US regulatory requirements.

Canada’s Bombardier

Even if a product is competitive, it does not guarantee success. Canada’s Bombardier (ticker: BDRBF ) sold its C-Series narrow-body jets to Airbus after struggling sales.

Comac
credit: Comac

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