Boeing Co is concerned about the impact of possible trade tariffs on the cost of running its supply chain, but has not yet seen any impact from US-Chinese trade tensions on its business, chief executive Dennis Muilenburg said on Sunday.
“The discussion right now is proposed tariffs, ongoing discussions. So in terms of actual implementation and things that are impacting us, we haven’t seen a material impact yet,” Muilenburg told reporters.
“We are very much engaged in the discussion. We are concerned that it could affect supply chain costs,” he said. “But note that supply chains are flowing in both directions between [these] countries as we both support existing fleets as well as build new airplanes.”
Photo: Reuters
Washington recently imposed 25 percent tariffs on US$34 billion of Chinese imports and Beijing responded with tariffs on the same amount of US exports to China.
The US administration then raised the stakes, threatening 10 percent tariffs on US$200 billion of Chinese goods, prompting China to warn that it would hit back.
“Rhetoric about potential penalty actions are a concern to us,” Muilenburg said.
Speaking at a briefing ahead of the annual Farnborough Airshow in Hampshire, England, which started yesterday, Muilenburg said that both the US and China understood the importance of aerospace to their economies.
He said that the countries share key interests, as China needs planes to boost its air transport capacity and the US relies on the sector for thousands of valuable export jobs.
“Aerospace thrives on global trade, free and open trade,” Muilenburg said, adding that the sector dives economic benefit globally.
On Boeing’s plans for a potential new passenger plane, Muilenburg said that the company would not take a decision on whether to launch the potential middle-of-the-market design until next year.
Boeing would not let the entry into service slip beyond a target of 2025, even though it is taking the time needed to hone the business case for the novel type of jet, he said.
“We want a 2025 airplane,” Boeing Commercial Airplanes chief executive Kevin McAllister said, adding that it would be more economic to run than other aircraft in its category.
Boeing is looking at developing a plane to try to stimulate new routes in a gap between its benchmark 737 single-aisle model and the smallest version of its widebody Boeing 787 jetliner.
Analysts said that the deadline is crucial because it represents the sweet spot for replacements of older Boeing 757 and Boeing 767 fleets.
Any sign of delay would allow European rival Airbus SE to argue that airlines would do better to pick an improved version of its hot-selling A321 neo airplane, covering many of the same missions.
Boeing executives said the market would be better served by a tailor-made aircraft with superior economics. Airbus says its A321neo already accounts for a large slice of that sector.
Flanked by many of Boeing’s top executives as the company prepared to play up innovation at the air show, which ends on Sunday, Muilenburg said he saw a future for supersonic and hypersonic technology, but that it was too early to talk about the timing.
Boeing executives highlighted the value of the company’s investments in Britain, after a trade row between Boeing and Canada’s Bombardier threatened jobs in Northern Ireland, on which British Prime Minister Theresa May depends for her legislative majority.
Britain is said to be nearing a decision to award a new contract for early-warning planes to Boeing, prompting a backlash from Airbus and others wanting a formal competition.
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