If the $110 million price tag for a brand new airliner suddenly doubled, would you be surprised if the customers just, vanished? Boeing said on Wednesday it’s now trying to re-market 41 completed or in-production planes originally intended for several Chinese airlines. The orders were abandoned in response to President Donald Trump imposing a 145% tariff on goods imported into the United States from China. A retaliatory 125% tariff was enacted by China on imported American goods.
A Boeing 737 Max being prepared for delivery at the planemaker’s completion center in Zhoushan, China was unexpectedly flown to Guam last week, a sign that the aircraft was headed across the Pacific Ocean back to Boeing’s facilities just outside of Seattle. While there isn’t any evidence of an official Chinese government ban on Boeing imports, it’s now clear that the country’s state-owned airlines aren’t willing to eat the massive tariffs’ financial costs.
A huge loss for Boeing could be a victory for Airbus
In its Q1 earnings call on Wednesday, Boeing CEO Kelly Ortberg outlined the company’s predicament. He expected 50 aircraft deliveries to China over the rest of the year. Only nine of those planes haven’t entered production yet. Finding other customers to fill the build slots won’t be an issue, but getting an airline to buy someone else’s plane is a huge dilemma. Ortberg said:
“It’s an unfortunate situation but we have many customers who want near-term deliveries so we plan to redirect the supply to the stable demand and we’re not going to continue to build aircraft for customers who will not take them.”
While Boeing is struggling, Airbus is on the verge of a massive deal in China, according to Reuters. The European giant is in negotiations to close a 500-plane deal. So far, the tariff war’s impact on the aviation industry is playing out exactly as AerCap CEO Aengus Kelly predicted last month. The head of the world’s largest plane leaser forecasted that the market would split into two spheres: the United States and everywhere else. Boeing would be relegated to its domestic market and Airbus would conquer the rest of the world.
