China’s orders for aircraft from Boeing in doubt after direction from Beijing

Beijing’s instruction to Chinese airlines not to take further delivery of Boeing jets or parts could cost the US manufacturer as much as $40bn.

Beijing’s order to Chinese airlines not to take further deliveries of Boeing jets or parts could amount to a $40bn blow to the US manufacturer.

The direction, reported by Bloomberg, came as trade tensions continued to escalate following the US decision to impose 145 per cent tariffs on Chinese goods.

President Donald Trump repeated the news in a social media post, saying “China just reneged on the big Boeing deal, saying that they will not take possession of fully committed-to aircraft”.

Boeing’s order book shows 164 aircraft are earmarked for Chinese airlines and leasing companies, including 130 737Max, 23 777X and 777 freighter aircraft, and 11 787s.

The orders are in addition to 18 aircraft delivered to China by Boeing in the first three months of this year, out of 130 deliveries in total.

The manufacturer determines the order of deliveries based on the date the order was lodged, aircraft type, the order size, and other commercial and political considerations.

With ticket prices ranging from $US120m ($189m) for a 737 Max 8, climbing to $US442m for a 777X, any walkback of the orders would amount to a considerable loss for Boeing.

The consequences for China could be greater, however, with the country’s three biggest carriers, Air China, China Eastern and China Southern, operating large fleets of US aircraft, including almost 500 737s, 82 777s and 38 787s.

Without the ability to access new parts from Boeing it could be difficult to maintain those aircraft.

China is far from the manufacturer’s biggest customer, with the country’s 130 aircraft order eclipsed by those from the US, India and the United Arab Emirates.

In fact China has a much bigger order with European manufacturer Airbus, with China Eastern, China Southern, Air China and Shenzhen Airlines awaiting a total of 292 A320 family aircraft, worth more than €35.4bn ($60bn).

A China Eastern Airlines Boeing 737-800 parked in Wuhan. Picture: AFP

The Chinese carriers also have significant orders for A350s, worth $US366.5m apiece, and then there’s China’s own aircraft manufacturer, COMAC, the Commercial Aircraft Corporation of China.

Air China, China Eastern and China Southern all operate COMAC aircraft in their domestic fleets, and the manufacturer recently announced its first C909 delivery to Lao Airlines, the flag carrier of Laos.

Indonesia’s TransNusa and Brunei-based GallopAir also have C909s in their fleets.

Described as the first “short-medium-range turbofan regional aircraft independently developed by China in accordance with international civil aviation regulations”, the C909 is one of three aircraft being made by COMAC.

The others include a C919 “jet-type trunk liner” and a C929 described as a long-range widebody with 280 seats “effectively meeting the global demand for international regional air passenger transport”.

Airline CEOs continue to watch the progress of COMAC closely, with Emirates president Sir Tim Clark and Qantas CEO Vanessa Hudson among those refusing to rule out buying Chinese aircraft in the future.

“Right now it’s not an option because of the commitment that we’ve given to Airbus,” Ms Hudson said in Hamburg last month.

“But I think it’s great that there’s more competition coming, and I think that we’ll watch how they perform with great interest.”

Originally published as China’s orders for aircraft from Boeing in doubt after direction from Beijing