Rumors are flying in China’s aerospace community ahead of the Zhuhai air show next month.
People speculate that Commercial Aircraft Corp. of China, or Comac, might unveil some of the initial orders for its coming commercial jetliner that is being designed to compete with Boeing Co.’s B737 and Airbus’s A320.
Aerospace industry insiders say rumors have it that Shanghai-based Comac may announce during the air show in southern China, scheduled for Nov. 16 through Nov. 21, that Air China, China Eastern Airlines, China Southern Airlines, as well as maybe Hainan Airlines, have placed orders for the new aircraft—the Comac C919.
Comac is expected to start delivering the 160-seat jet as early as 2016.
Those “orders” are supposed to hint at a successful launch of the C919 jetliner, which is likely to use lots of foreign technology, from engines to avionics. They are also supposed to symbolize China’s steady progress in developing capabilities to design and manufacture its own commercial jetliners.
But there are questions over whether those orders measure up to the Western aerospace industry’s standard for firm orders.
“The big question is what constitutes an ‘order’ in China,” says one foreign aerospace industry executive. “With Western manufacturers, the standard practice is to announce only firm orders, and that an aircraft maker needs to collect a nonrefundable deposit payment” in order for it to count the order as “firm” and announce it publicly, such as at an air show.
With Comac, “it’s not clear how that works, and I doubt they would discuss those details,” the foreign executive says. Those anticipated orders might just be described as “commitments” and not yet “firm orders,” he says.
He and other foreign aerospace industry insiders all declined to be named out of fear that their comments might offend China.
The announcement that Comac is rumored to be planning for the Zhuhai air show would follow the pattern it set with a smaller commercial jet called the ARJ21—how the aircraft was unveiled and whose initial orders were announced at the Zhuhai air show in 2008.
Comac developed the 70-to-100-passenger ARJ21 and announced at the Zhuhai air show two years ago that it had won its first overseas order from General Electric Co. GE, which is supplying the engines for the ARJ21, agreed to buy five of the regional jets with an option for 20 more, in a deal that could amount to $750 million. The Comac regional jet is supposed to go into service as early as next year, and GE executives have said the company was planning to lease those ARJ21 jetliners to China’s domestic airline companies to be used within China. Several Chinese airlines have since placed orders for the aircraft as well.
Still, Western aerospace executives say it isn’t quite clear if Chinese airlines that have placed orders for the ARJ21 are going to honor their commitment to purchase or lease the aircraft. Industry insiders say ARJ21 buyers face little or no penalty for cancellation—loose contractual terms that are likely to apply to the C919 as well, they say.