Boeing Co. may finally see a sales breakthrough for its 737 Max aircraft in China when presidents Joe Biden and Xi Jinping meet this week, ending a long commercial freeze in a critical overseas market for the US planemaker.
The Chinese government is considering unveiling a commitment for Boeing’s 737 jetliner during the APEC Summit in San Francisco, as a signal of a recent thaw between the two nations, said people familiar with the matter who aren’t authorized to speak publicly. Terms of a potential agreement are still under discussion, and could change or fall apart before the heads of state meet on Wednesday, they cautioned.
While the White House has made resuming military communications with China a top priority at the summit, the rare meeting between the two global leaders also provides an opportunity to reset trade on aerospace.
A 737 Max agreement would mark an important breakthrough for Boeing, after it lost its market lead in China to arch-rival Airbus SE. The US manufacturer hasn’t made any significant sales of its best-selling narrowbody jets in China since at least 2018, before two crashes led to a global grounding of the model. Since then, tensions between the two governments have stifled commercial dealmaking.
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Boeing declined to comment. China’s Foreign Ministry didn’t immediately respond to a request for comment.
Xi isn’t expected to unveil a formal order for the 737 Max, Boeing’s largest source of revenue, said the people. Aircraft commitments falling short of a firm sale often take the form of a memorandum of understanding or letter of intent.
One of the largest US exporters, Boeing has seen sales to China dry up as trade hostilities simmered. China is forecast by Boeing to make up about 20% of global aircraft demand over the next two decades. With travel coming back from pandemic-era lows, a deal with Boeing would ensure a flow of 737s to the nation’s airlines with delivery slots sold out through the late 2020s.
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Boeing is also preparing to deliver the first 737 Max to China since March 2019, when the nation’s regulators were the first globally to ground the aircraft. The planemaker has taken about a dozen of the planes earmarked for China out of storage, but work appeared to slow in recent weeks, Jefferies analysts said in a Nov. 6 report.
The timing of the delivery resumption isn’t tied to the ongoing diplomatic talks, said two of the people. Boeing has about 85 737 Max intended for China in storage, and restarting deliveries could help the planemaker reach its target of shipping between 375 and 400 of the jets this year.
--With assistance from Will Davies.
Author: Julie Johnsson, Siddharth Philip and Jenny Leonard