Boeing’s commercial airplane sales to China have slowed to a trickle as U.S.-China relations have deteriorated. But there are new prospects for the company to regain traction.
A meeting this month between President Biden and President Xi Jinping of China produced no public progress toward resuming aircraft sales, but may ease tensions between the two countries, which bodes well for Boeing, an airline giant. American manufacturing. Perhaps most importantly, Boeing and China still need each other.
“There are a lot of incentives for everyone to reach a deal here,” said Eddy Pieniazek, head of advisory at Ishka, an aviation consulting firm. “A lot of it is just timing.”
It’s been six years since Boeing’s last large jet order in China, a agreement to buy 300 aircraft which was signed during a visit to Beijing by President Donald J. Trump. For several years, the company’s customers and government officials in China have also refused to allow delivery of previously ordered 737 Max planes, the company’s most popular airliner.
As a result, Boeing has redistributed dozens of aircraft destined for Chinese airlines to other customers. Boeing has 85 Max planes in storage awaiting delivery to Chinese carriers, for which the planes were even painted years ago. These are among 250 planes in Boeing’s inventory, most of which the company said it expected to deliver by the end of next year.
China is a crucial market for Boeing. Before the pandemic, about a third of Boeing’s 737s were being delivered to the country. Over the next two decades, Boeing ProjectsChina will account for 20 percent of global aircraft demand. This means China will need about 6,500 single-aisle planes like the 737 Max and more than 1,500 larger twin-aisle planes, like Boeing’s 787 Dreamliner, Boeing said.
The Max was banned worldwide for 20 months after it was involved in two fatal crashes in late 2018 and early 2019, which killed 346 people in Indonesia and Ethiopia. Passenger flights aboard the Max resumed across much of the world in early 2021, but China was the last major country to allow the plane to fly again. The first Max passenger flight took place in January and all 95 Max aircraft in China are now back in service.
While Boeing’s sales and deliveries to China have declined considerably, the company has not been left out. Boeing sold a handful in 2020 to a Chinese leasing company, ICBC Leasing, which also took delivery of a dozen Max planes in 2021 and 2022. Boeing also sold and delivered dozens of 777 cargo planes to customers in China in recent years.
In the three years since the Max began flying again, Boeing has received more than 2,100 new orders for the plane worldwide, not including cancellations. During an air show in Dubai this month, the company announced more than 200 additional orders, about a third of those for the Max. That sales momentum, faith in the company’s ability to speed up deliveries and other recent positive news have helped lift Boeing’s stock price more than 15 percent this month.
But Boeing still trails its European rival, Airbus, in orders. Airbus has more aircraft in service and on order in China and has taken the opportunity to try to extend its lead: last year it announced an order for almost 300 more aircraft in the country, and this year said it would double production capacity at a factory there.
Still, China will struggle to grow without Boeing, experts said. Even with existing orders from Boeing, Airbus and Comac, a local plane maker, China is expected to need about 1,100 more planes by the end of 2030 to replace aging planes and meet growing demand for domestic travel, according to IBA, a consultancy. aircraft. .
“We’ll need to see some announcements over the next year to fill those gaps,” said Dan Taylor, head of consulting at IBA. “Comac will not be able to cover all that.”
In the two decades before the pandemic, air travel in China increased tenfold, rising from just over 60 million passengers a year in 2000 to nearly 660 million in 2019. according to the World Bank. That growth rate is likely to moderate in the coming years, particularly now that China has built more kilometers of high-speed rail lines than the rest of the world combined. But the country’s appetite for air travel is still expected to increase.
China will need new planes to meet that growing demand. Of all passenger planes in China, more than 95 percent are in service, according to Cirium, an aviation data provider.
To meet its needs, the country has moved ahead with the production of its own narrow-body aircraft, the Comac C919, which is similar in size and range to the Max and its main rival, the Airbus A320. The Chinese government has generously funded Comac, a state-owned company with more than 110 buildings in Shanghai, for the design, testing and assembly of the C919.
But the C919 uses equipment, including engines, from General Electric and other American and European suppliers, meaning even that plane’s future is tied to Western nations. The aircraft had its first publicized test flight in 2017 and last year entered limited commercial service between Shanghai and Chengdu.
Most orders for the C919 have been placed by Chinese airlines, although some have come from developing countries that are part of China’s Belt and Road Initiative. The arrival of the C919 means Chinese airlines will have a locally produced alternative to Airbus or Boeing, which entered the Chinese market 50 years ago, although experts said it would be years before Comac could manufacture such aircraft in large quantities.
The price of the C919 is widely believed to be lower than its competitors Boeing and Airbus, but foreign airlines are concerned about its fuel efficiency. Greater efficiency can lead to big savings in operating costs and has become increasingly important as airlines feel pressure to reduce their large carbon footprints.
Comac is also working on a wide-body, long-haul plane that could one day compete with planes like the Airbus A340 and Boeing 787 Dreamliner, but has not said when that plane might be ready.
Building a commercial aircraft manufacturer is no easy task, and experts say it will likely be many years before Comac can produce planes on the same scale as Airbus and Boeing, which have decades of experience and established global supply chains.
“Over the next decade, China needs Boeing and Airbus,” said Michel Merluzeau, director of Aerospace Intelligence & Research, an aerospace and defense consulting firm.