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Boeing CEO warns of sales losses from U.S.-China trade tension

Boeing CEO warns of sales losses from U.S.-China trade tension
Justinas
Baltrusaitis
1 year ago
3 mins read

Boeing (NYSE: BA) Chief Executive Officer Dave Calhoun has raised the alarm over the impact of the continued U.S.-China trade tensions on the aircraft manufacturer’s sales.

Speaking during the U.S. Chamber of Commerce Aviation Summit, Calhoun said the trade impasse would give Boeing’s competitors like Airbus room to dominate the Chinese market.

Boeing and Airbus each sell almost a quarter of their aircraft to China which is the world’s largest domestic travel market

“We can’t afford to be locked out of that market. Our competitor will jump right in. Nothing good comes from restricted trade,” Calhoun said.

China yet to clear Boeing 737 Max

The impact of the trade war can be seen in the handling of the Boeing 737 Max that was grounded globally due to safety issues. Most countries, including the U.S., have cleared the jetliner, but China still raises safety concerns.

However, Chinese authorities maintain they will keenly approach the approval of the grounded Max fleet. Industry players are now concerned the approval might be derailed with a growing diplomatic tension with the U.S.

In clearing the Boeing Max, the manufacturer rolled a series of safety protocols ending a 20-month long grounding. Other changes include the use of data and pilot training.

Furthermore, it has emerged that China did not order any Boeing 737 Max during President Donald Trump’s administration. The tensions escalated during Trump’s tenure after he raised concerns over the trade imbalance between the two countries.

Amid the tensions, China Eastern, a state-owned airline revealed its negotiating with Boeing for a possible Max order. However, the airline remains cautious before proceeding with the deal. 

The executive acknowledged that although President Joe Biden is working to end aircraft tariffs with European Union, the China case might be hard to crack.

“I hope we can separate intellectual property and rights from trade, and continue to encourage a free-trade environment between these two economic juggernauts. I think it’s critically important,” said Calhoun.

Concerns over reduced sales to China

Last year, Boeing sold only two 777 freighters to China Cargo, breaking a sales drought from late 2017, and the trade tensions might complicate matters further.

“I think politically (China) is more difficult for this administration, and it was for the last administration. But we still have to trade with our largest partner in the world, China,” Calhoun added.

Amid the warning on potential sales, Boeing is working to recover from almost $12 billion in losses recorded in 2020. The record loss was mainly due to the coronavirus pandemic that grounded air travel.

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Justinas Baltrusaitis
Author

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.

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