China to buy 200 Boeing jets, Trump says, fewer than expected

A 13-year-old private Boeing aircraft that U.S. President Donald Trump toured on July 26 to check out new hardware and technology features. Ben Curtis/AP/FILE via CNN Newsource

BEIJING — China has agreed to buy 200 Boeing jets, with a potential for the order to rise to as many as 750 planes, U.S. President Donald Trump told reporters on Friday, adding that the planes would have GE Aerospace engines.

The deal “includes approximately 200 planes and a promise of up to 750 if they do a good job,” Trump told reporters. More details on the deal, such as the type of jets and the deliverytimeline, were not immediately available.

The orders, if finalized, would mark Boeing’s first major Chinese deal in nearly a decade, after the U.S. planemaker was largely shut out of the world’s second-largest aviation market amid trade tensions between Beijing and Washington.

• Latest updates on company news here

Boeing said the deal involved “an initial commitment” for 200 aircraft and that it expected more such commitments to follow after what it described as the initial tranche.

The planemaker traditionally uses the word “commitments” to refer to preliminary deals that are yet to be finalized, and are not posted on the company’s official order backlog.

Boeing said it now looked forward “to continually addressing China’s aircraft demand.”

Boeing CEO Kelly Ortberg, and GE Aerospace chief Larry Culp were among the group of American executives who accompanied Trump to China in hopes of clinching deals or resolving business disputes.

Trump said China’s Boeing orders include models 777 and 737, in an interview on Fox News’ Special Report with Bret Baier.

“He (Xi) committed to 200 Boeings, big ones, 777s, and 737s, and a lot of big, big ones, big, beautiful Boeing planes,” Trump said in the interview aired on Friday evening.

For China, such a big order would secure capacity to keep growing its aviation market as production of its home-grown COMAC C919 narrow-body falls short of ambitious targets.

It would also help Boeing narrow the gap with rival Airbus, which has pulled far ahead in China in recent years.

An estimate from aviation intelligence and advisory firm IBA put the value of the 200-aircraft order at roughly US$17 billion to US$19 billion, assuming 80 per cent of the mix is made up of MAX jets.

“This number, however, could increase to US$25 billion if a larger proportion (around 40 per cent) of the total order is announced for the widebody aircraft,” IBA’s Samuel Kenekueyero said.

The deal would be a much-needed win for Trump, whose aggressive tariffs and other trade policies have so far failed to make much of a dent in the large U.S. trade deficit.

An order for more than 500 jets, if it materializes, would be the largest in aviation history, surpassing IndiGo’s 500-aircraft deal for Airbus narrowbodies, though China’s purchase would likely be split among its three major state-run carriers.

• Latest updates on investing here

Order size below expectations

Shares of the U.S. planemaker had dropped nearly four per cent on Thursday after Trump told Fox News Channel China had agreed to buy 200 jets, well below analysts’ expectations. They were down about 2.6 per cent on Friday, while GE Aerospace shares fell two per cent.

Industry sources have said Boeing was originally in negotiations for at least 500 narrowbody jets tied to the Beijing summit with dozens of widebody jets and potentially as many as 200 to follow at a later date.

Trump said Xi would pay a return visit to Washington in September, implying it may become the focal point of the next tranche of potential plane orders.

However, concerns over after-sales support have weighed on buying decisions, said Li Hanming, an independent expert on China’s aviation industry.

“The reason China isn’t buying is very simple: no one wants to buy something without guaranteed after-sales maintenance and support. Last May, the U.S. was still threatening export restrictions on parts. If they impose parts embargoes like that, who would still dare to buy Boeing?”

---

Reporting by Ju-min Park and Eduardo Baptsita. Writing by Eduardo Baptista. Editing by Muralikumar Anantharaman, Andrew Heavens and Mark Potter