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Originally published November 16, 2010 at 10:00 PM | Page modified November 17, 2010 at 6:54 AM

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China plane-maker challenges Boeing, Airbus

Commercial Aircraft Corp. of China announced its first 100 C919 passenger-plane orders, breaking Airbus SAS and Boeing's ...

Commercial Aircraft Corp. of China (Comac) has mounted a challenge to Boeing and Airbus in the world's second-biggest aircraft market, announcing its first 100 C919 passenger-plane orders.

GE Capital Aviation Services, General Electric's leasing arm and the world's largest plane lessor, said it agreed to buy as many as 10 C919s. China's big three domestic airlines are also among the customers for the narrow-body plane, state-controlled Comac said Tuesday at the Zhuhai air show in southern China, without identifying how many planes had been ordered by each customer.

Chinese airlines accounted for more than half the orders, said Zhang Xinguo, vice president of Comac shareholder, Aviation Industry Corp. of China. The C919's Chinese customers include Air China, China Southern Airlines, China Eastern Airlines, HNA Group and CDB Leasing, according to the Comac statement.

Comac has a full-sized model of the front section of the aircraft on display at the air show as it challenges Boeing and Airbus's grip on a domestic plane market that, by Boeing estimates, could be worth $480 billion through 2029. The Chinese plane-maker expects to sell more than 2,000 C919s worldwide over 20 years competing against Boeing and Airbus's most popular jets.

"The aircraft is of national importance," said Harry Chen, a Shenzhen-based analyst at Guotai Junan Securities. "But, as it's only on the drawing board so far, we still have to see how fuel-efficient and less expensive it really is."

The C919, which has 166 seats in its standard version, competes with Boeing's 737 and the Airbus A320. The plane is scheduled to make its maiden flight in 2014 before entering service two years later.

Gecas, as the GE leasing unit is known, also announced an order for as many as 25 China-made ARJ21 regional aircraft at the last Zhuhai air show in 2008, as GE seeks to boost sales in the world's fastest-growing major economy. The 70-seat ARJ21, China's first regional jet, made a demonstration flight at this year's exhibition.

China first announced plans for the C919 in 2008 to help develop a globally competitive aerospace industry and pare its reliance on imports. The nation will trail only the U.S. in plane orders over the next 20 years, according to Boeing.

"There's certainly enough pie locally to keep Comac and their partners busy for a long time," said Derek Sadubin, chief operating officer at industry consultants Centre for Asia-Pacific Aviation in Sydney. "It does remain to be seen whether the aircraft does sell overseas."

Comac is working with overseas suppliers on the C919, including CFM International, a venture between GE and Safran that has won a $10 billion engine contract. Other suppliers include Honeywell International, United Technologies and Parker Hannifin.

China's economic growth has stoked demand for aircraft and boosted its importance in the global aviation market. Air China, China Southern and China Eastern are among the world's four-largest carriers by market value. China Southern is Asia's biggest by passenger numbers.

Nationwide passenger numbers may jump fivefold in the 20 years ended 2029, estimates AVIC, the nation's largest aerospace company.

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China is due to receive 112 aircraft from Airbus this year, or 22 percent of the Toulouse, France-based plane-maker's total production, Ascend said this month. It will take 71 planes from Boeing, or 15 percent of output, according to the London-based aviation-data company.

Airbus this month announced an order for 102 planes from China, including 50 A320s. The plane-maker will assemble half of the single-aisle planes at a plant in Tianjin, China, its only production line outside of Europe. Boeing has won 737 orders this year from Air China, Okay Airways and China Southern's Xiamen Airlines.

"We welcome all competition," Jim Simon, Boeing's vice president for China commercial-airplane sales, said at the air show. "It makes the industry better, frankly, because it makes us sharper at our game."

Boeing and Airbus also face other new competitors in the single-aisle segment, the largest part of the global plane market. Bombardier is due to begin deliveries of its CSeries planes, which sit as many as 149 passengers, in 2013. Empresa Brasileira de Aeronautica, known as Embraer, has also said it's considering plans to build a similar-sized aircraft.

"We were born into competition 40 years ago, and now we're No. 1," Airbus's China head Laurence Barron said at an air-show news conference. "Frankly, we're used to it."

China had 1,259 commercial aircraft at the end of 2008, according to the nation's aviation regulator. In 1980, it had a fleet of about 140 commercial planes, mostly seating less than 50 passengers, under the management of the air force.

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