China (COMAC) to take on Boeing, Airbus with homegrown C919 passenger jet (CNN)

CNN article published on November 2, 2015; Financial comparison done on November 3, 2015

Highlights:

-“China wants to challenge Boeing and Airbus duopoly

-C919 has received 517 orders, mostly from Chinese carriers, leasing firms

-FAA, U.S. aviation body, hasn’t certified the plane, limiting global sales

The C919 — a twin-engine, narrow-body aircraft seating up to 174 people — is similar in size to the Airbus 320 and Boeing 737 series of jets, long the workhorses for airlines around the world.

Launched in 2008, the C919 project marks China’s return to the business of making large passenger jetliners, after a failed attempt in the 1980s.”

-The Catch-
“However, some aviation enthusiasts in China are not so sure about the state media’s claim that the C919 is a product of “complete Chinese intellectual property.”

Compiling published information, CNN was able to verify a widely shared graphic that indicates that many key components of the C919 are made overseas — including the engines (by U.S.-French joint venture CFM International), power system and landing gears (both by U.S.-based Honeywell).”

CNN research

CNN research

The company behind the C919 is Commercial Aircraft Corp Of China Ltd (COMAC). It is a private company according to Bloomberg data.

Bloomberg

Bloomberg

Further, “C919’s maiden flight to take place at least a year away.

Chinese public reactions have seemed mixed online. While many express pride and support in an indigenous jetliner, others sound skeptical about the safety of an entirely made-in-China plane.

For now and in the foreseeable future, though, it’s a safe bet that President Xi will continue to ride a specially configured Boeing 747 jumbo jet when he travels abroad.”

Good to know financial facts:

Airbus (ticker: EADSY) and Boeing (ticker: BA) are considered the duopoly in the global commercial aviation market

Both had a total revenue of 157.5 Billion USD (1.10 USD = 1 EUR)  in 2014.

Comparing both companies’ CAPEX (capital expenditures) to Revenue ratio for the past decade, we arrive in the following graph:

Author's calculation with (1.10 USD = 1 EUR)

Author’s calculation with (1.10 USD = 1 EUR)

It appears at a quick glance at these numbers that Boeing is doing a better job with their business expenses. I’d still suggest for the interested investor to further seek more profitability and debt ratios before purchasing any shares.

Video

C919 YouTube video

C919 YouTube video

Link to YouTube video (https://www.youtube.com/watch?v=IwBUtx7yidc)

-End-

Disclosure: I do not have shares in any of the companies mentioned in this article and don’t plan to initiate purchase within the next 24 hours. I would not receive any compensation for doing this article. I am not a professional financial analyst. This is just a hobby. Lastly, my work is not error-free, but I strive for it to be. Do not consider as a buy or sell advice. Invest at your own risk.

If you are interested in this similar approach to investing and would seek updates, I wish to invite you to this Facebook group SEEKING VALUE (https://www.facebook.com/groups/SeekingValue/?ref=bookmarks)

Happy investing.

Mark Y.

Reference

CNN Beijing by Shen Lu

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