Beauty is Only Skin Deep

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This may best describe China’s recent certification of the domestically produced C919 jet, intended to eventually compete with Boeing and Airbus families of single aisle commercial jets.

The key word for investors in the foregoing is “eventually.”

This type of certification allows the airplane to be delivered to Chinese customers for domestic flights.  A broader production certification is somewhere in the future, and would be required before the C919 can significantly impact Boeing and Airbus demand.

While the plane is assembled in China, it relies heavily on imported components such as engines and avionics.  Considering the current state of U.S./China trade relations, a reliance on critical foreign components could be an issue.

An “all China” version of the C919 would take more than a decade and many billions of dollars.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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