The agreement initially involves about 200 aircraft and a commitment to potentially acquire up to 750 if performance is good, President Trump stated. These aircraft will be powered by GE Aerospace engines.
Details regarding the specific aircraft types and delivery schedule remain undisclosed. Previously, on 14/5, President Trump had only mentioned on Fox News that China agreed to buy 200 Boeing aircraft.
If finalized, this would mark Boeing's first significant order from China in nearly a decade. Chinese customers had largely shunned the US airline due to escalating trade tensions between the two nations in recent years. China is currently the world's second-largest aviation market.
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A Boeing 777-9 in Paris, France, 6/2023. Photo: Reuters
Boeing also confirmed an "initial commitment" for 200 aircraft. The company anticipates further sales after this first phase. Boeing typically uses the term "commitment" to refer to preliminary agreements that are not yet finalized or recorded in official order books. Boeing stated its expectation to "continue meeting China's aircraft demand."
Boeing CEO Kelly Ortberg and GE Aerospace CEO Larry Culp were part of the US business delegation accompanying President Trump to China. They aimed to finalize deals or resolve business disputes there.
In a Fox News interview aired on the evening of 15/5, President Trump specified that the Chinese orders would include 777 and 737 series aircraft. He said, "President Xi committed to buying 200, 777 and 737, along with many large, beautiful Boeing planes."
For China, this substantial order will help expand its aviation market, especially as domestic production of the narrow-body COMAC C919 aircraft has not yet met targets. For Boeing, it offers a chance to narrow the gap with competitor Airbus, which has outpaced Boeing in China over the past few years.
According to aviation consulting firm IBA, an order for 200 aircraft is valued at approximately USD 17-19 billion, assuming 80% are 737 MAX models. Samuel Kenekueyero, an analyst at IBA, noted, "This figure could rise to USD 25 billion if the proportion of wide-body aircraft in the order is larger, around 40%."
The agreement also represents a crucial win for President Trump, given that his administration's stringent import tariffs and trade policies have not yet significantly reduced America's substantial trade deficit.
If the order exceeds 500 aircraft, it would become the largest in aviation history, surpassing IndiGo's agreement for 500 narrow-body aircraft with Airbus. However, China will likely distribute the order among its three major state-owned airlines.
Boeing's stock fell nearly 4% on 14/5 after President Trump told Fox News that China agreed to buy 200 aircraft, a figure below analysts' expectations. The company's shares continued to decline by approximately 3,8% on 15/5. Meanwhile, GE Aerospace's stock decreased by 2%.
Reuters, citing industry sources, reported that Boeing initially negotiated to sell at least 500 narrow-body aircraft, along with dozens of wide-body planes, during President Trump's visit to China. There was potential for an additional 200 in a later phase. President Trump mentioned President Xi would visit Washington in September, suggesting this could be the timing for the next purchasing round.
Ha Thu (via Reuters)
