Will Eastern fly again?
(Moneywatch) Fabled-but-defunct Eastern Air Lines may soon fly again with the help of a Chinese aircraft manufacturer.
Jack Shi, senior vice president for commercial development of Eastern, told a news conference at the China Airshow in Zhuhai Tuesday that plans to bring back the iconic aviation brand have been in the works since 2008 and that the fledgling airline is now shopping for aircraft.
Shi said that Eastern, which went bankrupt in 1991, hopes to start flying from Miami to Latin America next year. These efforts may be getting a boost from the Commercial Aircraft Corp. of China (COMAC) which appears set to let Eastern buy or lease its C919 jet either at a steep discount or in return for an equity stake in the carrier.
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Even with that help, Eastern faces a very steep climb if it is going to be successful.
"Airline re-launches are generally not successful," says Stephen Trimble of FlightGlobal, a trade publication for the aviation industry. "Pan Am is a good example. The issue isn't really a lack of nostalgia by airline customers, but really the absence of any room in the market for new entrants."
Trimble says for most U.S. airlines domestic networks are shrinking, not growing. Although a lot of airline startups have been tried, the only two recent successful ones are JetBlue and Virgin America.
Even so, COMAC is likely to get on board as a way to show off the C919 to foreign buyers. The 150-seat jetliner is due to make its maiden flight sometime in 2014. There's no word yet on what Eastern would fly until it becomes available. The manufacturer hopes the C919 can challenge medium-sized passenger aircraft from Airbus and Boeing.
If it is to have any chance of doing that it needs to be seen in operation in foreign skies. So far, the only non-Chinese order for the C919 are to GECAS, the leasing and financing unit of General Electric which co-produces the jet's engines.
COMAC's strategy of partnering with a fledgling airline has worked for others in the past. United Airlines got off the ground initially with help from Boeing, which used the airline as a customer for its jets.
Still this effort marks a big departure for China's commercial aircraft industry which until recently had mostly built planes which were copies of old Russian designs.
"The ARJ21 has been the most recent product, but it has been delayed years already," he says. "The C919 looks like it was designed with a bit more care, and is largely based on Western technology in the avionics, flight systems and engines especially."
COMAC claims the C919 has already broken even with the 380 pre-orders sold to Chinese airlines. However, Beijing's participation in these airlines may mean that these sales are just asset transfers between parts of the government.
