Boeing's grounding puts in suspense the order of China-China trade-related motor planes

SEATTLE / PARIS / SHANGHAI (Reuters) – China's bombing of a major Boeing Co 737 MAX jet following the crash of Ethiopian Airlines cast a shadow over the immediate hopes of the airline. American manufacturer of gliders, according to industrial sources' said.

The evidence of a major potential order for more than 100 jet planes worth far more than $ 10 billion (£ 7.5 billion) at list prices had increased in recent years. weeks, while Washington and Beijing reported progress in trade negotiations to resolve a trade war that had lasted for several months.

These expectations were fueled by signs of accumulated demand resulting not only from a decline in Chinese government procurement while both parties were plunged into a tariff war, but also because China had not Boeing private aircraft ordered past in 2018, according to trade and industry. familiar sources with the subject.

Now, these sources say that it is uncertain of how quickly China will be willing to give the 737 MAX the expected rider after ordering its own airlines to stop flying the aircraft. jet – although many things may change as Ethiopian investigators gather clues about the second fatal crash of the plane. new model in five months.

On Wednesday, the United States joined a wave of nations that failed the 737 MAX following Sunday's crash in Ethiopia, which killed 157 people on board. The planes will be immobilized for weeks, US legislators announced Thursday.

Analysts said the crash had created additional uncertainty for the biggest US exporter compared to sales in China.

"It's definitely on their list of concerns because China is Boeing's biggest export market," said Richard Aboulafia, an aerospace badyst with Teal Group.

Even before the 737 MAX crisis, trade tensions were generally seen as a growing source of risk for Boeing, which relies on China for one of four aircraft delivered by it.

China is about to supplant the United States as the world's largest aviation market over the next decade. It engulfs Boeing and Airbus aircraft while investing in local aviation companies. According to Boeing, China's demand for 7,700 20-year-old jet aircraft is valued at $ 1.2 trillion.

Although trade frictions have obviously hurt companies such as US soybean producers and Chinese manufacturers, their impact on Boeing has been less clear.

China routinely makes large jumbo orders to mark important diplomatic moments, such as a 300 Boeing deal signed during Trump's Beijing visit in 2017.

But badysts say that behind these headlines, such deals contain a mix of new demand, repetitions of older orders and credits against future agreements, which means the impact remains unclear.

The same could apply to any new jet order announced under a commercial peace agreement, said a former industry negotiator.

State buyer China Aviation Supplies declined to comment.

US President Donald Trump said he was confident that the United States could conclude a trade deal with China, but ruled out an agreement that would not serve US interests.

It is possible that China also decides to use a large order of Airbus aircraft to reduce the accumulated demand. Orders for European jets also slowed, in part because Chinese buyers were wary of trade and the economy was slowing.

An aide to French President Emmanuel Macron said on Thursday that there were encouraging signs that Airbus was approaching a long – negotiated agreement with China for tens of thousands of dollars. narrow-body aircraft.

TALK ABOUT

Exorbitant tariffs between the United States and China, the world's two largest economic powers, have slowed the global economy and forced Boeing to march for months on a geopolitical tightrope.

On one side, Boeing has expanded its industrial presence in China with the goal of conquering markets and increasing its lead on Airbus sales in Asia.

On the other hand, Boeing officials took the trouble to take good action when they publicly discussed trade, partly to avoid clashes with Trump, who repeatedly said that the United States should measures to protect American jobs and technology.

A person familiar with the issue said before the grounding that Boeing could win a "mbadive" order run by 737s.

The company's data shows that Boeing did not win any aircraft market announced in mainland China last year, as the US-Sino trade fight turned into a veritable trade war.

Equally significantly, commercial sources indicate that for the first time in a number of years, Boeing has not won any new orders of any type on the continent that is often reserved without one of the parties does not disclose the name of the buyer because of complex approvals.

Analysts believe that any reduction in trade or security should not disrupt a trend that China will balance aircraft orders over time between Europe and the United States in order to achieve a political balance.

But Yang Yingbao, a retired professor at the Nanjing University of Aeronautics and Astronautics, warned that if the trade war remained unresolved, the dispute could force China's hand.

"If the US government immisces in the market and does not allow Boeing to sell planes smoothly, it will force China to buy Airbus aircraft."

Boeing declined to comment on this story.