As a result, the share of Boeing’s deliveries going to China has been falling as most of the rest of the world started accepting the Max once again.
Calhoun has talked to the Biden administration and understands the broader issues at stake in negotiations with China.
“We need the two governments to want to restore some of the trade,” he said. “And I think it’s in both parties’ interests to want to do that.”
“I have confidence that will happen,” he added. “I do know that if it goes on for too long, [Boeing] pays a price.”
Following the Party line
China has not imposed any tariffs or other trade barriers on US passenger jets. But Chinese airlines are following the direction of the government in placing their orders, said Richard Aboulafia, aerospace analyst for the Teal Group.
The trade tensions are one of the reasons that Chinese aviation authorities have been slower than most to return the 737 Max to service, he said.
“The CAAC (Civil Aviation Authority of China) does a good job keeping China’s air space safe, but it has clearly proven it’s not an independent agency,” he said.
Boeing announced Tuesday that it delivered 17 planes in May, including 10 of the 737 Max and five freighters — none to a Chinese airline or leasing company. (Boeing has not announced any orders from a Chinese airline since November 2017.) Deliveries are important because that’s when Boeing gets most of its money from the sale of a plane.
But the company’s orders from China are likely stronger than the 1% figure that shows up in official numbers. There are likely some Boeing orders that go to unidentified purchasers that are destined to end up in China once finalized, said Aboulafia, as well as some aircraft ordered by leasing companies destined for Chinese customers.
Aboulafia said there are hopes of an eventual grand bargain between Chinese and US negotiators that will include Chinese purchases of Boeing jets. But there is relatively little in Boeing’s control on the timing of such a deal.
“This is way over Boeing’s head,” he said.
And there’s another problem for Boeing: China’s overall aircraft purchases were showing signs of slowing down even before the pandemic and recent trade tensions. That may mean the forecasts of the Chinese market accounting for 25% of aircraft purchases over the next 10 year are no longer realistic.