Boeing's stock fell more than 4% after President Donald Trump revealed that China agreed to purchase only 200 Boeing aircraft, which is below the previous expectations of analysts and the market that anticipated up to 500 planes amid fierce competition with Airbus for the Chinese aviation market.
Boeing, the US aerospace giant, saw its stock price drop 4.1% in trading on Thursday, 14 May 2020 GMT+7, after President Donald Trump told Fox News that China had agreed to order 200 Boeing airplanes.
President Trump spoke about the discussions with Chinese President Xi Jinping, saying, "One thing he agreed to today is that he will order 200 planes, 200 large planes." However, this figure is lower than what analysts and sources had previously expected, which included potential orders of up to 500 Boeing 737 MAX jets as well as other wide-body aircraft with higher prices.
Although details of the deal, including the models of planes and delivery schedules, have not been officially announced, analysts consider the order volume to be "below expectations." Matt Akers, an investment analyst at BNP Paribas, said, "While additional orders may still be possible on this trip, investors currently interpret the figure as falling short of expectations."
Currently, China is the world's second-largest aviation market, with intense competition between Boeing and Airbus. Over the past decade, Airbus has captured the majority of the Chinese market share and established an A320 assembly plant in Tianjin.
Analysts estimate that China needs to order as many as 1,000 new aircraft now to keep up with travel growth and may require up to 9,000 new planes by 2045.
It is well known in the industry that political relations influence aircraft orders, with the Chinese government often announcing aircraft purchases during diplomatic visits to signal bilateral relations. The last major order Boeing received from China was in 2017, totaling 300 planes, before tensions between the two countries increased.
On this visit to China, Boeing CEO David Calhoun and GE Aerospace CEO John Slattery accompanied President Trump, aiming to secure a major trade deal to boost the companies' sales recovery.
. Reuters