Boeing’s Resumption of Airplane Deliveries to China Amid Trade Fluctuations
Boeing is poised to restart its airplane deliveries to China next month after a hiatus caused by trade tensions during the Trump administration, according to CEO Kelly Ortberg. This decision came after a brief pause in China’s acceptance of deliveries, which Ortberg noted last month.
"China has now indicated they will resume deliveries," Ortberg stated during a conference hosted by Bernstein, marking a positive shift for Boeing after recent uncertainties.
As a leading U.S. exporter, Boeing’s aircraft production plays a significant role in alleviating the U.S. trade deficit. However, the company has encountered tariffs on imported components from countries like Italy and Japan, particularly for its popular Dreamliner models manufactured in South Carolina. Ortberg explained that much of these tariffs could be recouped once the planes are exported once again. "The only duties we would incur would be for aircraft delivered to U.S. airlines," he added.
Ortberg expressed optimism about the evolving trade policies, stating, "I don’t believe these disruptions will last in the long term." He reiterated Boeing’s commitment to increasing the production of its 737 Max jets this year, pending approval from the Federal Aviation Administration (FAA). The FAA had limited the output of these jets to 38 units per month, following issues that arose during a flight involving an Alaska Airlines jet where an unsecured door plug blew out shortly after takeoff.
The Boeing chief mentioned that the company aims to ramp up production to 42 Max jets monthly by midyear, with ambitions to reach 47 units per month later in the year. Furthermore, the long-awaited Max 7 and Max 10 variants are expected to receive certification by the year’s end, representing significant advancements in Boeing’s narrow-body aircraft lineup.
Since Ortberg’s appointment last August, many airline executives have commended his leadership during a challenging period marked by financial losses and crises affecting the company’s reputation and safety record, following two tragic Max crashes. Delivery delays have been a significant concern for airline executives, particularly as they faced surging demand for air travel post-pandemic.
"I believe Boeing has turned a corner," remarked Scott Kirby, CEO of United Airlines. He emphasized that current supply chain issues are contributing to delays in receiving new aircraft. "We ordered more planes expecting the supply chain to face challenges," he noted.
Boeing’s efforts to navigate the complex landscape of international trade, especially with a key market like China, highlight the ongoing dynamics affecting the aviation industry. As the company prepares for increased production and deliveries, it remains to be seen how these adjustments will influence Boeing’s overall performance and market standing in the coming months.
This situation underscores Boeing’s strategic importance in both the U.S. economy and the global aerospace sector. With increasing deliveries expected, the company’s future may hinge on its ability to adapt to changing trade policies and address the demands of airline partners.
