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Boeing, Embraer May Have No Reason to Fear China’s Weak Rival AVIC

BEIJING (TheStreet) -- China's state-run aviation conglomerate posted a weak, first-half financial report this week that's got stock analysts buzzing about potential delays for the Chinese jetliners designed to rival Boeing (BA - Get Report) , Airbus (EADSF) , Bombardier (BDRBF) and Embraer (ERJ) aircraft.

Manufacturers under the Aviation Industry Corporation of China umbrella have fallen behind on military as well as commercial projects, according to a Friday report by Shanghai Securities, whose analysts crunched the 2014 first half figures released Tuesday. AVIC stock trades in Hong Kong.

AVIC said it lost 85 million yuan in the period, as revenues fell 10.7% from 7.03 billion yuan in the same period a year earlier. Revenues reached only 36% of the government's full-year target, the company said, adding that it expects sales to jump in the second half on higher customer deliveries.

The securities firm report blamed "financial bottlenecks" for the company's performance and gave an "underweight" stock investment recommendation.

AVIC's key commercial projects include two in the pipeline at its affiliate Commercial Aircraft Corporation of China or Comac: the under-development Comac C919, billed as a future challenger to the Boeing 737 and Airbus A320, and the Comac ARJ21 regional jetliner, China's reply to aircraft built by Bombardier and Embraer.

A slow pace of development for the C919 has fueled "big uncertainty" over whether Comac can hit its current October 2015, target for the jet's first test flight, the securities firm said. Missing that target would throw off plans to deliver the first customer model in 2018.

The company is not famous for meeting schedules. For example, Comac plans to deliver its first ARJ21 by the end of this year, nearly eight years later than originally planned for the jet's commercial roll-out and 13 years after the jet's development began. The client, China's Chengdu Airlines, is buying two jetliners.

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