Boeing CEO says 200-jet China deal an ‘initial tranche’ with more to come
Investors had expressed disappointment over the size of the deal, which is much smaller than a package of about 500 planes that sources told Reuters was being discussed ahead of a meeting between Trump and Chinese leader Xi Jinping this month.
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But at a US conference on Wednesday, Ortberg said his visit to China with Trump had been “super successful”, reopening the market to Boeing’s narrow-body planes for the first time in nearly a decade after orders were effectively frozen due to trade tensions between Washington and Beijing.
“This is a good start. And I’m confident this is the first tranche of aircraft to keep this market open, with more to come,” Ortberg said.
The 200-jet commitment is a completely new deal and does not include previously announced orders, according to a source familiar with the matter. He also added that delivery schedules have not yet been confirmed.
The jets are expected to be distributed primarily among China’s three major state-owned airlines, Air China, China Eastern Airlines and China Southern Airlines; the source added on condition of anonymity because the information has not yet been made public. Boeing declined to comment beyond Ortberg’s statement. China’s Ministry of Commerce and state-owned airlines did not immediately respond to requests for comment.
If the Chinese government commits to a group of narrow-body planes, it allocates them to individual airlines, and then Boeing negotiates firm orders on an airline-by-airline basis, Ortberg said.
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“The initial commitment of 200 units will turn into an order later in the year,” he said. “I never had any plans to go to China and return with a package full of 500 orders.”
COMMITMENTS IN STAGES
After his visit to China, Trump said that Boeing purchases could go up to 750 aircraft. China plans to buy several hundred more Boeing jets, but will not announce the entire order at once, preferring to announce commitments in stages, the source said. China could then commit to buying another 300 to 500 jets, potentially bringing the total up to 700, the source said.
But the source added that this would depend on Boeing meeting its obligation to supply critical spare parts for the jets already in service with Chinese airlines, which have struggled to secure components due to trade tensions between Washington and Beijing.
China’s Ministry of Commerce confirmed the 200-jet deal last week but did not provide detailed information about the aircraft types. The ministry added that the United States will provide supply guarantees for aircraft engine parts and components; a condition the source described as an important prerequisite for further acquisitions.
Trump last year threatened to impose export controls on Boeing aircraft parts as part of his response to Washington’s export restrictions on rare earth minerals.
