14 November | Regulation | CEOs

Boeing hopes for a positive result of the Biden-Xi negotiation

The Boeing Company set hopes for a meeting of Joe Biden and Xi Jinping which will take place on Monday.

It has been 3.5 years since Chinese airlines received the last few Boeing 737 Max airplanes. China used to buy a quarter of the planes that the American company produced each year.

Currently, the European competitor Европы Airbus SE gained access to the market of narrow-body jets. It will continue until Biden convinces Xi Jinping to allow the American airline to return. According to Boeing’s forecasts, Chinese Airlines will have to transfer 8,485 passengers and cargo aircraft for $1.5 trillion over the next two decades. This is more than 20% of world supplies. Airbus and the Chinese company Comac are unlikely to be able to carry so many passengers alone.

If the leader of the Chinese Communist Party shows the willingness to cooperate with Washington in the aerospace industry, Boeing will consider it a victory. Aviation was significant in the relationship between China and America for decades. Even the promise to continue the negotiation or possible state visit was an important sign. 

According to US Trade Representative Katherine Tai, Boeing is very interested in the deal. However, it doesn’t define the trade policy of the USA, and currently, it is planned to focus on the U.S.

As a managing director with AeroDynamic Advisory Richard Aboulafia said about the meeting of two leaders, the main thing is to stabilize the military and political standoff, and not the questions of commerce.

China is one of the latest countries to not return the 737 Max to commercial use following accidents in 2018 and 2019. Due to these accidents, Boeing twice cut its annual delivery plan for this model to 375 units, although it was originally planned to deliver 500.

Analysts voice concerns that Boeing won’t be able to compete with Airbus and recover financial performance without new deliveries of the 737 Max to China.

At the moment, China is more inclined to cooperate with Airbus. In July, the company received an order for 292 aircraft. China is abandoning the practice of ordering both American and European aircraft. Ultimately, it will need Boeing airplanes, but as long as the demand for air tickets isn’t high due to quarantine, the issue of purchasing equipment can be postponed.

An analyst from Bloomberg Intelligence George Ferguson thinks that the first steps of China to weaken the anti-COVID measures could be beneficial for Boeing. 

Bloomberg Intelligence analyst George Ferguson believes China's first moves to ease some of its anti-COVID restrictions could be beneficial for Boeing. The number of trips from Southeast Asia may rise, and air ticket sales will increase.

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