China's New C919 Plane Wins Two Big Orders
30.04.2024 - 03:36
/ skift.com
/ Air China
/ Gordon Smith
Chinese efforts to break the Airbus and Boeing duopoly took another step forward on Monday as one of the nation’s largest airlines agreed a major order.
China Southern is buying 100 locally built C919 planes. The carrier is China’s biggest domestic operator and also boasts a large international network.
The C919 is produced by Commercial Aircraft Corporation of China (COMAC), a state-owned firm founded in 2008 to develop passenger airliners. The plane is considered an emerging competitor to Airbus’ A320 and the Boeing 737.
While COMAC’s first product, the ARJ21, has only chalked up around 130 deliveries to date, there are much higher hopes for the C919.
Just last week, Air China signed a similar agreement with COMAC for 100 C919 jets. It means all three of the nation’s largest airlines now have major orders pending for the aircraft.
According to the latest schedules, China Southern’s new C919s will be delivered in stages from 2024 to 2031. This short lag time between an order and first delivery gives COMAC a big commercial advantage over Western rivals. Both Airbus and Boeing have long waiting lists, with delivery slots booked out until the end of the decade.
However, this step up on international competitors could be short-lived. The C919’s engines and many of its systems come from foreign suppliers.
China’s Global Times newspaper reported that at least 40% of the components of the aircraft are internationally sourced. This means COMAC could yet run into worldwide supply chain headaches that are plaguing its more established rivals, especially as it ramps up production.
COMAC’s list price for the latest deal was approximately US$9.9 billion, comprising the aircraft itself and associated engines.
However in a market filing, China Southern confirmed that a discount was negotiated. Variations from the catalog price are commonplace in the airline industry, particularly for such large orders from high-profile customers.
“The board believes that the degree of price concessions afforded to the group in the acquisition is comparable to the price concessions the group has obtained in similar transactions in the past,” said the Chinese-language filing.
The discount referenced in Monday’s China Southern deal appears to echo that of China Eastern. In September 2023, the airline also bought 100 C919 jets, with Reuters reporting a “substantial discount.”
China Eastern was the launch customer for the C919. It currently has five in its fleet of more than 600 aircraft. All of China’s biggest airlines maintain large order backlogs with Airbus and or Boeing.
Chinese airlines buying locally built aircraft is nothing new. The more significant development comes if, or possibly when, short delivery times,