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Big Blow to Boeing: Airbus Gets $35 Billion Jet Order from China


Mar. 26 2019, Updated 12:17 p.m. ET

Airbus wins $35 billion Chinese order

Boeing (BA) lost a multibillion order to its arch-rival, Airbus, which was a big blow to the company amid the ongoing 737 MAX crisis and related federal investigations. The European airplane manufacturer signed a deal to sell 300 aircraft to China during a state visit by President Xi Jinping to Paris. The trade order includes 290 narrow-body A320-family jets and ten wide-body A350 aircraft. The deal is worth 30 billion euros, or $35 billion, at the list price.

The recently concluded deal is almost double what French President Emmanuel Macron pushed for during his visit to China in January 2018. At that time, Macron had been trying to make a deal for 184 Airbus narrow-body A320 jets worth $18 billion. However, negotiations didn’t materialize at that time.

Boeing grabbed 300 jet orders in 2017 when President Donald Trump visited China. However, Boeing didn’t receive any orders from China in 2018 due to intensified trade relations between the US and China throughout last year.

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MAX crisis hampering orders

Further, two deadly crashes of its fast-selling 737 MAX series jets within five months are also hampering Boeing’s orders. China is reportedly considering excluding 737 MAX orders from trade negotiations with the US. It has been estimated that Boeing could get 100 jet orders worth $10 billion for its 737 MAX series planes as part of trade negotiations between the two nations.

Garuda Indonesia is already in discussion with Boeing to scrap its previous agreement to buy 49 MAX 8 planes worth $6 billion. Although Indonesia’s national carrier is willing to swap the orders for other models, the recent tragedy has put the reputation of the fast-selling Boeing jet at risk. Moreover, Lion Air, another Indonesian air carrier, is reportedly planning to cancel its $22 billion worth of orders for 737 MAX series planes and switch to Airbus.

The 737 series planes account for 80% of Boeing’s total aircraft orders and therefore account for the majority of its revenues. US air carriers (IYT) are the major buyers for this series of planes. Southwest Airlines (LUV) has placed an order for 280 jets, while American Airlines (AAL) and United Airlines (UAL) have ordered 100 each.


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