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China Wins 100 Orders for First Jetliner

China boosted its ambitions to challenge Airbus andBoeing for a slice of a global market worth $1.7 trillion with a 100-plane order for its first commercial jetliner at a lavish ceremony on Tuesday.

Airplane
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Airplane

State-owned manufacturer COMAC, or Commercial Aircraft Corp of China, announced the orders at the Zhuhai Airshow, two years after launching designs for the 150-seat C919 aircraft.

It said the orders came from four Chinese airlines, which were widely expected to support the strategic project, and also the leasing arm ofGeneral Electric, which will supply the engines together with French partner Safran.

It is the first time buyers have committed to the aircraft, which COMAC expects to start building next year followed by a maiden flight in 2014 and first delivery in 2016.

Officials did not give a value for the deal or break down the orders by airline.

A similar deal for Airbus or Boeing jets would be worth about $7 billion at list prices, but aircraft are normally sold at a discount of at least 20 percent and analysts said China would have to lower prices even further to start foreign sales.

Established in 2008, COMAC has been trying to design and build large passenger aircraft with a capacity of more than 150 passengers to reduce the country's dependency on Boeing and Airbus, which dominate the world market for large airliners.

As the country's first homegrown large commercial aircraft, the C919 is intended to compete with Boeing's 737 and Airbus's A320 in the narrow-body segment, which Boeing expects to generate worldwide sales of more than 21,000 planes worth $1.7 trillion over the next 20 years.

Analysts said foreign airlines would be sceptical about buying the plane until it had proven itself in service, but Tuesday's signing is the biggest breakthrough for the politically sensitive project since it was launched two years ago.

"The customer signing lays a market foundation for the C919, which has smoothly entered the engineering development phase," COMAC Chairman Zhang Qingwei said in a statement.

Sales of a smaller regional jet, the ARJ21, which makes its debut at the show, have been described as disappointing.

Tuesday's buyers included the country's three top airlines Air China, China Eastern Airlines andChina Southern Airlines, as well as HNA Group, parent of Hainan Airlines.

GE's leasing arms GECAS, owner of one of the world's biggest airliner fleets, agreed to buy an unspecified number of aircraft, as did the financing arm of China Development Bank.

Experts said the involvement of GECAS signalled China's determination to win acceptance abroad, but efforts to woo international support suffered a glitch when foreign journalists were banned from attending the signing.

"GE will want to back their engine and their commitment may also help persuade the (U.S.) Federal Aviation Administration to support certification of the aircraft," said Bradley Perrett, Asia-Pacific bureau chief of specialist magazine Aviation Week. "The FAA's support will be critical for selling the aircraft to airlines in developed economies."

A full-size prototype of a C919, which resembles the Airbus A320, was displayed at the ceremony packed with government officials. COMAC hopes to sell 2,000 of the aircraft.

China, which has surpassed Japan as the world's second-largest economy, is the world's fastest-growing air travel market.

Boeing forecasts China will triple its airplane fleet size over the next 20 years, making the country the largest aircraft market after the United States. The country would need 4,330 new planes during the period worth $480 billion, Boeing said.

Goldman Sachs said this week that Chinese air passenger traffic could reach 1 billion people per year by 2022.