If you think about the airline business, there are 2 global giants which control 95% of the market and they are Boeing and Airbus. Boeing is based in the US and Airbus is based in France and the UK. At the moment, thanks to COVID, airlines are flying more people and ever before and have the need to expand and update their planes. Both Boeing and Airbus offered the new improved version and both companies have a 10 year plus backlog of orders to build planes. As an outside looking in, you might think there is opportunity in the marketplace, but a giant bank account will be needed.

In an article by Lisa Barrington of Reuters, there is an outsider looking to break into the market and it is the Commercial Aircraft Corporation of China (COMAC). The company has unveiled the C919 which is certified within China and 4 planes are flying with China Eastern Airlines.

COMAC will invest tens of billions of yuan over the next 3 to 5 years to expand C919 production capacity. At the same time, the company is going through the process of being certified with European Union Aviation Safety Agency (EASA) which started in 2018. (with safety regulators time is expected to play a large role).

COMAC has 2 passenger products: the ARJ21 regional jet and C919 which seats from 158 to 192 seats. The airliner competes against the Airbus A320neo and the Boeing 737 Max 8 models.

Linking to dividend paying stocks, whenever there is an industry with high demand and great margins there will be some competition. At first the competition will compete on the margins or offer immediate delivery rather than delivery next year. Then the competition will gain traction and maybe more market share which means the established companies will use government regulations to slow down the competitors. After that happens, which may take a few years then we see how the marketplace react.

There are more questions than answers, till the next time – to raising questions.