As a representative of the U.S. government, Boeing Co. (BA) signed a joint venture agreement on Tuesday with Chinese research institutions and state companies including Air China Ltd. and PetroChina Ltd. (PTR) for developing bio-fuel to be used by Chinese airlines. Also, Boeing intends to inaugurate a flight using this alternative energy in 2010.
In an effort to combat climate change and promote new industries, the U.S. and China announced this research collaboration. Though the Chinese companies have yet to finalize on the plant that is to be used as a fuel source, researchers are looking at algae and jatropha, a tree grown in south China that produces an oily nut. The goal of the research is to produce a fuel, likely a mix of bio-fuel and standard jet fuel, which can be used in commercial airliners with no variation to standard engines.
Boeing is already successful in flying four fights with bio-fuel in the U.S. and is waiting to scale up production for commercialization. Boeing expects to use bio-fuel for commercial aviation in the next three to five years.
Boeing continues to invest heavily in research and development. The company’s research and development expenditure increased by $30 million year over year to $1 billion in the first quarter of 2010. Given Boeing’s continued investment in development programs, the company expects research and development expenditure to total $3.9 billion to $4.1 billion in fiscal 2010. Boeing remains strong with a cash balance at the end of the first quarter of 2010 of $4.5 billion. Moreover, the U.S. defense budget is also skewed toward a number of prominent Boeing programs.
In the decades to follow, China is expected to be the market leader in the aviation industry. However, its market dominance will not come at the cost of endangering the environment as China is in the process of “going green” by assertively promoting alternative fuels. China is also consequently reducing its growing dependency on imported oil and gas. This concerted effort on China’s part to gain market share is therefore expected to be achieved in an environmentally responsible way.
Headquartered in Chicago, Boeing Company designs and produces commercial airplanes (787, 737, 747, 767, 777), defense systems and civil and defense space systems. It is also the largest contractor for NASA (National Aeronautics and Space Administration). Its competitors include Lockheed Martin Corporation (LMT) and Northrop Grumman Corporation (NOC).
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