A giant aviation deal from China on Friday underscored how trade tensions between Washington and Beijing can impact individual companies, with Boeing Co left looking on as rival Airbus SE scooped up orders worth at least US$37 billion.
China’s top three airlines ordered almost 300 Airbus jets — one of the European plane maker’s biggest ever single-day deals — in the first major acquisitions since COVID-19 pandemic restrictions isolated the world’s second-largest economy.
“It is disappointing that geopolitical differences continue to constrain US aircraft exports,” a Boeing spokesperson said, adding that sales to China historically support tens of thousands of US jobs.
Photo: EPA-EFE
China is a key market for Boeing’s 737 family of jets and Airbus’s A320s, mainstays of modern commercial aviation. Relations between China and the West have become increasingly strained in recent years, particularly with the US as a trade dispute erupted and widespread tariffs were imposed by both sides. Boeing is the US’ biggest exporter.
In response to Boeing’s comments, an editorial in the Chinese state-run Global Times said the order was a “normal business transaction,” and that aviation was a key plank of China-Europe economic and trade cooperation.
It said the deal was potentially helped by Airbus having an assembly plant in China and the weaker euro.
“It is natural for the US side to feel sour after losing the competition to Airbus,” the Global Times said. “Judging from the performance of these two companies in the global market, since 2019, Airbus has been way ahead of Boeing in terms of competing for passenger plane orders and market share.”
Bloomberg Intelligence analysts, including George Ferguson, wrote that Friday’s order “underscores the ongoing trade rift with the US and the travails for the 737 MAX, which still isn’t flying in the Asian country. Boeing’s build rates will remain stunted without China.”
Chinese airlines and Hong Kong’s Cathay Pacific Airways Ltd (國泰航空) have 142 unfilled orders with Boeing, including for the 737 MAX, the yet-to-enter-service 777X, 787 Dreamliners and six freighter versions of 777 jets, the plane maker said.
In the latest order, China Eastern Airlines Corp (中國東方航空) is buying 100 A320neo narrow-body jets, while Air China Ltd (中國國際航空) and subsidiary Shenzhen Airlines (深圳航空) are to take 96. China Southern Airlines Co (中國南方航空), which in May removed more than 100 Boeing 737 MAX jets from its near-term fleet plans, is to buy 96 A320neos and lease additional planes.
China Eastern said in a statement on Sunday that it is in a better position to bargain as the aviation market has not fully recovered.
The airline said it “obtained conditions more favorable than ever in terms of pricing and some other commercial terms.”
China Southern said its board believes the concessions for its order were “comparable” with previous ones.
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