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 center 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 focused 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 giant Huawei Technologies Co. from buying US technology, and looking to extend the ban to five Chinese video-surveillance firms. Beijing vowed to retaliate, issuing a travel warning for the US and threatening to blacklist foreign firms. It launched a probe into FedEx Corp. for “wrongful” deliveries and Ford Motor Co.’s main joint venture in China was fined for antitrust violations on Wednesday.
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 rose less than 1% to $347.40 at 11:15 a.m. in New York after climbing as much 2.5% on the report of the negotiations in China. Through the close Tuesday, the shares had tumbled 18% since the March 10 crash of an Ethiopian Airlines 737 Max plunged the company into crisis.
Boeing declined to comment, while China’s Civil Aviation Administration didn’t immediately respond to a request for comment from Bloomberg News.
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. (Bloomberg)