Boeing might find a buyer in China due to Trump’s trade deal
While Boeing is way behind Airbus in sales due to the MAX grounding, the new trade deal makes China obliged to buy more US products
Beijing — The long-awaited trade agreement between the US and China may pave the way for Boeing to resume sales to the world’s second-largest aviation market, but the American giant has much catching up to do against European arch rival Airbus.
China Aviation Supplies Holding, which buys planes on behalf of the nation’s airlines, has been in talks with Airbus since 2019 about purchasing jets for the country’s next five-year economic plan that begins in 2021, people familiar with the matter said, asking not to be named discussing a private matter. Those talks began early last year, one of the people said.
China’s top economic planner, which needs to clear negotiations of this magnitude, hasn’t even authorised the state procurement firm to begin talks with Boeing yet as trade tensions held back discussions, the person said.
This means the US aircraft maker is at least months behind Airbus in securing orders from China, which Boeing estimates will need more than 8,000 planes in the next two decades. Boeing is still reeling from the grounding of its best-selling 737 MAX planes, which resulted in the company delivering less than half the planes that Airbus did last year, the biggest defeat in the industry’s 45-year duopoly.
On Wednesday, new CEO Dave Calhoun voiced optimism that Boeing will continue to have a valued relationship with China. A representative at the company declined to comment beyond what Calhoun said. The National Development and Reform Commission, which is China’s main economic planner, and China Aviation Supplies, didn’t immediately respond to requests for comment. Airbus declined to comment.
Things may be looking up for Boeing. Aircraft were among the $200bn in American purchases that China pledged to make as part of a phase-one trade deal with the US, though details weren’t disclosed. Also, it’s unlikely that China would shun Boeing entirely because the country has historically split its orders evenly between the two manufacturers, Airbus doesn’t have the capacity to meet all China’s needs and such a drastic move would require thousands of pilots to be retrained.
Trade tensions have hindered Boeing’s ability to capitalise on surging demand from a country that’s expected to become the world’s largest aviation market in the coming years. China will need to spend $2.9-trillion on new aircraft and ground services over the next two decades, Boeing predicted in September.
The talks with Airbus are separate from an already-announced commitment from China to buy $35bn worth of the Frabce-based company’s jets, according to the people.
In China, which led the grounding of the 737 MAX, plane purchases need to be cleared by regulators before they are handed off to China Aviation Supplies. Sales are then often recorded as coming from unidentified customers by Boeing and Airbus, and may be unveiled at various stages of the approvals process.