Friday , August 23 2019

Boeing in talks for 100-jet China deal amid trade tensions

Bloomberg

Boeing Co has been negotiating one of the largest orders ever of wide-body jetliners with Chinese airlines even as tensions between Washington and Beijing escalate, say people familiar with the talks.
The discussions centre on about 100 twin-aisle jets: 787 Dreamliners as well as 777X planes, the newest long-range aircraft in Boeing’s lineup, said one of the people, who asked
not to be named as the talks are private.
Negotiations have focussed in particular on the 777-9 variant, the planemaker’s costliest jet with a $442.2 million sticker price, ahead of the model’s
expected first flight later this month.
No deal is imminent, the people cautioned, and the trade war is a major complication for all involved. The Chinese side is
waiting for guidance from the government before pushing forward with the discussions, according to some of the people, as the tit-for-tat fight between the US and China intensifies.
The battle over trade and technology between the world’s two biggest economies has entered a new phase, with allegations China reneged on commitments made at the negotiating table triggering a fresh round of tariffs and smashing a months-long detente.
Companies are being caught in the fray, with President Donald Trump blocking telecommunications company Huawei Technologies from buying US technology, and looking to extend the ban to five Chinese video-surveillance firms.
Still, the airplane negotiations underscore the overlapping interests between the two nations in aviation. Boeing, under
pressure over the worldwide grounding of its 737 Max plane, is the largest US exporter and the deal would help reduce its home country’s trade deficit with China.
The potential order would be worth more than $30 billion before customary discounts, depending on the mix of aircraft.
Boeing declined to comment, while China’s Civil Aviation Administration didn’t immediately respond to a request for comment from Bloomberg News.
Emerging Superpower
China is an emerging aviation superpower, on pace to become the world’s largest aviation market in the 2020s. It has ambitions of eventually joining Boeing and Airbus SE as a dominant global planemaker, but the first locally developed wide-body jet is at least eight years away. That leaves the country’s airlines reliant on the duopolists for large jetliners to cruise over oceans and sate demand for travel by Chinese consumers.
“China’s not going to poke themselves in the eye. I don’t see them cancelling Boeing airplanes,” said David Pritchard, associate professor and aerospace researcher for the State University of New York, Empire State College. Instead, China over time will probably shift from its strategy of carefully dividing orders between Airbus and Boeing.
The new planes would help replace an earlier generation of 777 jetliners, one of the people said. Boeing has sold 101 of those aircraft to Chinese airlines, according to its website. While the 777-9 would make up a significant portion of the deal, there is also interest in the smaller -8, whose size is comparable to the 777-300ER.
Boeing has long predicted healthy sales for the 777X in China, where airlines have yet to order the hulking model.

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