Boeing disappointed over China airlines' Airbus order, political issues at play?
China's 3 top airlines announced deals to buy 292 jets from Airbus. "The US politicization of economic and trade issues has backfired."
China's three top airlines last week announced in tandem deals to buy a total of 292 jets from Airbus. The bulk order dealt a blow to the European planemaker's archrival Boeing, which put the blame on geopolitical differences for constraining U.S. aircraft export and call for "productive dialogue" between the two governments.
An editorial carried by Global Times, an English-language newspaper under People's Daily, wrote: "If there is any political factor in this, it can only be said that the US politicization of economic and trade issues has backfired."
On July 1, Air China and China Southern Airlines said they would each buy 96 A320neo-family jets, while China Eastern Airlines said it would buy 100 airplanes of the same type.
Airbus later confirmed the signature of orders for 292 A320 Family aircraft, Xinhua reported.
"These new orders demonstrate the strong confidence in Airbus from our customers," Christian Scherer, Airbus Chief Commercial Officer and Head of International, said in a press release.
They also showed the positive recovery momentum and prosperous outlook for the Chinese aviation market, said Airbus.
The orders will enter the backlog after the relevant criteria are met, noted the press release.
Given the current circumstances, it is quite normal for the media to paint the purchase as an Airbus "win" against U.S.-based Boeing due to the trade tensions between China and the U.S.. Take a look at the reports:
A giant aviation deal from China on Friday underscored how trade tension between Washington and Beijing can impact individual companies, with Boeing Co. left looking on as rival Airbus SE scooped up orders worth at least $37 billion. (Bloomberg)
Friday's deal signalled a visible step towards Beijing's European supplier, they said. Until now, global trade and diplomatic tensions have broadly had the effect of delaying politically sensitive import decisions across the board.(Reuters)
Airbus has secured a bulk order for 292 of its A320 single-aisle aircraft from four Chinese airlines, as deteriorating US-China relations tipped the balance for aviation sales in the European manufacturer’s favour, dealing a blow to the American rival Boeing.(South China Morning Post)
Boeing, disappointed, immediately responded:
“As a top US exporter with a 50-year relationship with China’s aviation industry, it is disappointing that geopolitical differences continue to constrain US aircraft exports,” noted the company in a statement on Friday.
“We continue to urge a productive dialogue between the governments given the mutual economic benefits of a thriving aviation industry. Boeing aircraft sales to China historically support tens of thousands of American jobs, and we are hopeful orders and deliveries will resume promptly.”
As a matter of fact, the announced order came as an implementation of a framework agreement signed during Chinese President Xi Jinping's state visit to France in 2019 when China Aviation Supplies Holding Company ordered 290 Airbus A320 and 10 Airbus A350. Delivery is expected to run from 2023 to 2027.
A statement by China Eastern Airlines said based on its confidence in the future development of the civil aviation, the company needs to plan and reserve its fleet capacity in advance.
During the delivery period of the introduced aircraft, part of the company's inventory of narrow-body aircraft will be withdrawn due to the age of the aircraft and the expiration of leases.
As the airline market has not yet fully recovered, the introduction of the aircraft will help the company to obtain better commercial terms.
Calling the order a "normal business transaction that is hard to find fault with", the Global Times Editorial went on to list several possible reasons for the Airbus win.
Judging from the performance of these two companies in the global market, since 2019, Airbus has been way ahead of Boeing in terms of competing for passenger plane orders and market share. On the one hand, this is partly due to safety concerns as flights operated by Boeing 737 MAX aircraft have still largely not resumed in various countries. On the other, the disruptions in the US supply chain have seriously affected Boeing's delivery capacity: The company had to pause the production of 737 MAX passenger planes in May. Sources said that China Southern Airlines canceled plans to purchase more than 100 aircraft from Boeing earlier this year because of "uncertainty over deliveries."
According to a previous assessment by the American Chamber of Commerce, if the US engages in a comprehensive "decoupling" with China and completely cuts off sales to China in the field of civil aviation, this would cause US output losses ranging from $38 billion to $51 billion and cause the US civil aviation manufacturing industry to shed 167,000 to 225,000 jobs.
Allowing some American politicians to continue to advocate decoupling and build a high wall against China would see American companies including Boeing face long-term pain, the Global Times warned.