Trump’s trade war with China is threatening Boeing’s crucial sales of larger aircraft, according to its CEO

boeing 787

The CEO of Boeing warned on Wednesday that President Trump’s escalating trade war with China was creating a risk that the company would have to cut production rates of its most advanced plane, the 787 Dreamliner, according to a Bloomberg report.
Boeing’s widebody jets have proved a crucial source of cash as the company works to get the grounded 737 Max fleet back in the air.
Orders from Chinese airlines — including a blockbuster order of 100 Dreamliners and 777X jets — play a major part of Boeing’s sales forcasts for the 2020s.
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Boeing CEO Dennis Muilenburg warned on Wednesday that the escalating trade war between the US and China is creating a new risk for its wide-body commercial airplane programs.

“We’re still hopeful that a trade deal will be accomplished and that airplanes will be part of that,” Muilenburg said Wednesday at an investor conference. “But a lack of a trade deal does add risk to our widebody skyline. So we’re paying close attention.”

Muilenburg’s comments were first reported by Bloomberg.

Boeing’s widebody 787 Dreamliner jets, which President Donald Trump once described as “beautiful,” could become a victim of his administration’s escalating trade war with China.

Boeing currently produces 14 Dreamliners a month, which is a record pace for twin-aisle jets.

However, the company still has several unfilled delivery slots based on that production rate over the next two years, and many more openings starting in 2022. “Without an acceleration in order activity, we estimate rate could be cut in 2022 with a potential announcement in late 2020/early 2021,” Jefferies analyst Sheila Kahyaoglu wrote in a report this week.

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Should the trade war continue to escalate and risk disrupting orders from Chinese airlines — which are figured into Boeing’s sales forecasts, and account for 17% of delivered Dreamliners to date, according to Kahyaoglu — the production rate could become unsustainable.

A potential sale of 100 787 and 777X jets to Chinese airlines has been held up by the trade war, which has caused delays as deal negotiations continue.

Boeing and Airbus are also expecting a wave of orders in the early 2020s as airlines start planning to retire older wide-body aircraft — in particular, the Airbus A330, A340, and older models of the Boeing 777.

However, fears of a global recession triggered by the trade war could delay those expected orders, according to Bloomberg.

The advanced 787 Dreamliner has been a crucial source of cash for Boeing as the company has worked to fix the grounded 737 Max aircraft. Boeing has not been able to deliver the aircraft to customers since the grounding began in March, and has not recorded any new orders of the narrow-body jet in months.

SEE ALSO: European regulators say they’ll test the fixed 737 Max themselves, rather than trusting the FAA’s findings

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Source:: Business Insider – Finance

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