6 Jun

Boeing Is Reportedly in Talks with China for a $30 Billion Order

WRITTEN BY Anirudha Bhagat

Megadeal negotiation

Boeing (BA) is reportedly negotiating a deal with Chinese authorities that’s believed to be the company’s largest ever order for its wide-body aircraft.

Citing anonymous sources, Bloomberg reported on June 5 that the aircraft manufacturer was discussing orders for ~100 twin-aisle jets.

Boeing Is Reportedly in Talks with China for a $30 Billion Order

As per the report, the company is pitching two variants of its twin-aisle planes: the 787 Dreamliner and the 777X. The negotiation is mainly focused on Boeing’s new long-range 777-9 model, which is expected to debut its first flight by the end of this month. The 777-9 variant is also Boeing’s costliest plane, with a price tag of $442.2 million.

On June 5, Boeing stock gained 1.2% on the news. The stock has returned 8.1% in the year so far and has underperformed the gains of the iShares US Aerospace & Defense ETF (ITA), which invests in US-based manufacturers, assemblers, and distributors of airplane and defense equipment. The ETF has returned 21.6% YTD (year-to-date). Boeing’s peers United Technologies (UTX), Lockheed Martin (LMT), and L3 Technologies (LLL) are up 23.4%, 34.7%, and 47.2%, respectively, YTD.

No deal is imminent

It’s expected that the deal will be worth over $30 billion. However, Bloomberg has stated that no agreement is imminent due to escalated trade war complications between the US and China.

The trade dispute between the world’s two largest economies has intensified since the Trump administration raised tariffs on $200 billion worth of Chinese imports to 25% from 10% on May 10. In retaliation, the Chinese Ministry of Commerce announced on May 13 that China would increase tariffs on $60 billion worth of US imports starting on June 1.

The tensions between the US and China further escalated on June 1 after Chinese Minister of National Defense Wei Fenghe warned the US not to interfere in security disputes related to the South China Sea and Taiwan. In response to this warning, acting US Defense Secretary Patrick Shanahan said that the US “would no longer ‘tiptoe’ around Chinese behavior in Asia,” Reuters reported on June 1.

Latest articles

CrowdStrike (CRWD) fell 9.5% today to close at $54.52. Analyst Walter Pritchard initiated coverage on CRWD with a “sell” rating and a target price of $43.

Micron (MU) stock was up 4.21% on Friday and closed at $45.10. MU was trading 12.2% below its 52-week high of $51.39 for a market cap of $49.9 billion.

Top utility stocks trended lower and lost 1.3% last week. Broader markets were positive but cautious on trade talk optimism, gaining 0.7% last week.

Analyst Ming-Chi Kuo expects Apple to launch the iPhone SE2 in Q1 2020. Priced at $399, it could help Apple gain traction in India and Southeast Asia.

Disney-owned Hulu plans to introduce video downloads, which Netflix has offered for three years. Disney hopes to narrow Netflix’s competitive advantage.

Ireland’s privacy watchdog has concluded its investigation into Facebook over its compliance with the European Union’s data protection law.