Boeing’s dominance of the commercial airplane market, alongside its rival Airbus, is looking more shaky than ever, after a door plug was ripped from a Boeing 737 Max 9 jet operated by Alaska Airlines earlier this year. Airline CEOs are now publicly demanding Boeing prioritize safety, as U.S. federal officials uncover dozens of manufacturing problems.
That may leave an opening for China’s state-backed Commercial Aircraft Corporation of China (COMAC) to shake things up. COMAC has spent the first few months of the year showing off its C919, a competitor to Boeing’s 737 and Airbus’s A320.
And Ronald Lam, CEO of Cathay Pacific, Hong Kong’s flagship airline, is paying attention. The airline CEO, in an interview with Fortune editor-in-chief Alyson Shontell at the Fortune Innovation Forum in Hong Kong on Thursday, said he expects a future “ABC” market for planes: Airbus, Boeing and COMAC.
The Cathay CEO said this “triangular competition” will be good for the industry. “We are very hopeful we can create another source of competition.”
Lam took over as Cathay’s CEO in January 2023, after previously serving as its chief customer and commercial officer and director of commercial and cargo.
Airline chiefs have been complaining about Boeing’s spate of safety and quality issues for the past few months. In January, United Airlines CEO Scott Kirbycalled the temporary grounding of the 737 Max 9 the “straw that broke the camel’s back for us.”
And on Wednesday, Emirates CEO Tim Clark told CNBC that Boeing needs a “strong engineering lead as its head” and a “governance model that prioritizes safety and quality.”
Cathay Pacific has both Boeing and Airbus planes in its fleet. On Thursday, Lam was optimistic that the U.S. planemaker will be able to “come on strong in time.”
“They have some immediate issues they need to tackle, but I do have faith,” he said.
Lam is one of the first airline CEOs based outside of mainland China to comment on COMAC’s entry into the market. COMAC’s C919 does not fly commercial flights outside of mainland China, and only one non-Chinese carrier, a small Indonesian airline, flies the smaller ARJ21.
But COMAC still has a lot to overcome before it gets mass acceptance. The C919 needs to be approved by both U.S. and European regulators; without their assent, airlines won’t be able to operate the C919 commercially in those markets.
Moving past COVID
Cathay Pacific recorded a $1.25 billion profit last year, its first annual profit since 2019, off the back of surging post-pandemic travel demand.
The Hong Kong-based airline suffered throughout the pandemic because, unlike many other airlines, it could not fall back on a domestic travel market. Mainland China, a key market for Cathay, only reopened its borders to people from overseas locations, including Hong Kong, in early 2023. The carrier lost $4.3 billion during the three years of the pandemic.
Yet after both Hong Kong and mainland China lowered COVID restrictions, Cathay, like many other airlines, had a patchy recovery. The airline struggled to get its passenger services back online quickly, leading to a spate of cancelled or delayed flights due to staff shortages.
Now that Cathay’s financials have improved, Lam said he wanted to put the airline on a path to future success. China in particular could be Cathay’s “secret sauce to success in the future,” he said on Thursday.
The airline is also trying to build better customer experiences, including launching new business class and first class offerings on its Boeing 777s in 2024 and 2025.
And to fix its staffing shortage, Cathay Pacific will go on a hiring spree: It aims to grow its workforce by 5,000 employees this year, hiring both internationally and from mainland China.
