A Boeing 777 production assembly line at the Boeing factory in Everett, near Seattle. Boeing had planned to deliver about 50 aircraft to China this year, but that has now been halted. Photo / Brett Phibbs
A Boeing 777 production assembly line at the Boeing factory in Everett, near Seattle. Boeing had planned to deliver about 50 aircraft to China this year, but that has now been halted. Photo / Brett Phibbs
Boeing has confirmed that China has stopped accepting new aircraft because of the US-China trade war, as the company’s shares surged after a smaller-than-expected loss.
In a televised interview with CNBC, Boeing chief executive Kelly Ortberg said Chinese customers had “stopped taking delivery of aircraft due to the tariff environment”, adding that, if the halt continued, the aviation giant would soon market the jets to other carriers.
United States President Donald Trump’s trade conflicts with China and other countries loom as a question mark for Boeing, a major US exporter, despite this week’s solid financial results.
Boeing planned to deliver about 50 aircraft to China this year, Ortberg said, adding that it wouldn’t “wait too long” to send the planes to other customers.
“I’m not going to let this derail the recovery of our company, so we’ll give the customers an opportunity if they want to take the airplanes.
Boeing’s engagement with the White House on trade had been “very dynamic”, Ortberg said on a conference call with analysts.
“I can’t predict” the course of trade talks, he added.
“We do hear signs that indicate that there will be negotiated settlements ... I just don’t know the timing.”
A priority was “to make sure we don’t see more countries in a similar boat as where we are with China”, he said.
Boeing downplayed the impact of Trump’s tariffs, saying steel and aluminium made up only 1% or 2% of aircraft costs, with most of the raw material supplied domestically.
US Treasury Secretary Scott Bessent says the US and China are still not talking formally about a tariffs deal. Photo / Chris Kleponis, CNP, Bloomberg via Getty Images
Under a US duty drawback scheme, Boeing can recover customs duties on certain goods when it exports the taxed items.
The company reported a loss of US$123 million (NZ$207m) in the first quarter, smaller than the $343m loss in the corresponding quarter a year ago. Revenues rose 18% to $19.5 billion.
In its earnings release, Boeing confirmed targets to raise commercial plane production as it bolsters its safety efforts after two fatal crashes of its 737 MAX planes and other major incidents.
It reaffirmed that production of its 737 MAX will hit 38 a month this year, while output of the 787 Dreamliner will climb to seven a month from five.
Boeing still expects the first delivery of its 777-9 next year.
It also reported a cash burn of $2.3b, “much better” than the expected $3.7b hit, according to analysts at TD Cowen.
On Tuesday, it announced plans to sell portions of its digital aviation solutions business to software-focused investment firm Thoma Bravo for $10.6b as it seeks to bolster its financial position.
Ortberg told analysts he was considering other divestments of assets “smaller” than those in the Thoma Bravo deal, which includes Jeppesen, an 81-year-old aviation navigation company.
“Our company is moving in the right direction as we start to see improved operational performance across our businesses from our ongoing focus on safety and quality,” Ortberg said in a press release.
