China Nears Deal for 500 Boeing Jets in Major Diplomatic Win for US Aviation

TradingKey - Boeing (BA) is reportedly in negotiations with China for a sale agreement involving 500 aircraft, which is anticipated to be the largest purchase from Boeing by China in recent years.

US Ambassador to China, David Perdue, stated that the negotiations have reached their final stages. Analysts suggest that both the US and China aim to use "airplane diplomacy" to thaw relations and lay the groundwork for future trade talks.

Sources indicate that the current focus of the negotiations is on the Boeing 737 Max series single-aisle jets. The last significant purchase of Boeing aircraft by China occurred in 2017, when it announced a $37 billion order for 300 planes. However, following two accidents involving the 737 Max, the model was grounded by China's aviation authorities in 2019.

Analysts believe that this order from China could rescue Boeing from its sales slump. Faced with limited market demand and increasingly stringent safety reviews, Boeing is experiencing sluggish sales. The company forecasts that the number of commercial aircraft in China will double over the next 20 years, reaching 9,755 planes, a demand that cannot be met by China's domestic manufacturers alone. If Boeing secures this order, it could significantly expand its market share in China, potentially altering its current business trajectory.

Moreover, since the onset of the tariff war initiated by the Trump administration, foreign governments purchasing aircraft from the US has become a crucial means of reducing the US trade deficit. Recently, countries like Uzbekistan and Indonesia have reached agreements or announced plans to purchase Boeing aircraft. Analysts perceive Boeing as one of the greatest beneficiaries of global trade agreements.

Boeing's stock has risen 21% this year. If the order with China is finalized, its stock could see further gains. However, continued attention is required on the company's production capacity, quality control, and the trade environment.