Trump-backed Boeing China deal finalized, first order of 200 aircraft revealed
Boeing, the aerospace giant, revealed on Friday that China had agreed to purchase 200 airplanes, as promised previously by US President Donald Trump on his visit to Beijing.“We had a very successful trip to China and achieved our major goal of reopening the China market to orders for Boeing aircraft,” the business, whose CEO Kelly Ortberg was part of the US delegation to China, said in a statement.This includes an initial commitment for 200 aircraft and we expect further commitments to come following this initial tranche,” Boeing said, thanking the Trump administration “for making this milestone happen.”“We now look forward to meeting China’s aircraft demand on a continuing basis,” it added.
China’s most recent Boeing order was placed in 2017, when Trump visited Beijing at the beginning of his first term in the White House. During that period, it ordered 300 single-aisle and wide-body aircrafts — a massive transaction for $37 billion.
On Thursday, Trump had said of the new Boeing commitment, telling Fox News anchor Sean Hannity during an interview: “I think it was a commitment.””That’s a lot of jobs,” the president said.
Speaking to reporters traveling with him on Air Force One was when he returned from China, when Trump said the agreement came with “a promise of 750 planes, which will be by far the largest order ever, if they do a good job with the 200.”
For some months, US media have speculated that Beijing was preparing to place a big Boeing order comprising 500 single-aisle 737 MAXs and roughly 100 bigger 787 Dreamliners and 777s.”He pledged 200 Boeings, big ones, 777s, and 737s and lots of big, big ones, big, beautiful Boeing planes,” Trump claimed in the interview with Fox News aired Friday evening.
For China, such a large order would lock in capacity to continue expanding its aviation sector while output of its home-grown COMAC C919 narrow-body misses ambitious expectations.
It would also help Boeing lessen its deficit with rival Airbus, which has forged forward in China in recent years.
An estimate from aviation intelligence and advisory group IBA valued the 200-aircraft deal at around $17 billion to $19 billion assuming an 80% mix of MAX jets.”This number could rise to $25 billion, however, if a larger proportion (around 40%) of the total order is announced for the widebody aircraft,” said Samuel Kenekueyero of IBA.
The accord would be a much-needed success for Trump, whose tough tariffs and other trade policies so far have failed to make much of a dent in the massive US trade deficit.
If it materialises, an order for more than 500 jets would be the biggest in aviation history, exceeding IndiGo’s contract for 500 Airbus narrowbody aircraft. However, China’s order would likely be shared amongst its three major state-run airlines.
Order size under forecasts
U.S. planemaker shares fell about 4% on Thursday after Trump claimed Fox News Channel China had agreed to buy 200 jets, significantly below analysts’ forecasts. Friday they were down around 2.6%, and GE Aerospace shares sank 2%.
Initially, Boeing was in negotiations for at least 500 narrowbody jets linked to the Beijing summit and dozens of widebody jets, with potentially as many as 200 to follow at a later date, industry sources said.
Trump said Xi will make a reciprocal visit to Washington in September, perhaps making it the centerpiece of the next round of possible jet orders.
However, Li Hanming, an independent specialist on China’s aviation business, said concerns over after-sales service had affected purchase decisions. “The reason China isn’t buying is really simple. Nobody wants to buy something without assured after sales maintenance and assistance. Last May, the U.S. was still threatening to restrict exports of parts. If they apply embargoes on parts like that, who would still dare buy Boeing?”