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Business News/ Companies / News/  Boeing warns US-China trade impasse may threaten company’s global sway
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Boeing warns US-China trade impasse may threaten company’s global sway

China will be one of the world’s hottest aviation markets as the coronavirus pandemic recedes, accounting for about a quarter of expected growth in jet sales over the next decade

The Boeing logo is seen at their headquarters in Chicago (REUTERS)Premium
The Boeing logo is seen at their headquarters in Chicago (REUTERS)

Boeing Co. Chief Executive Officer Dave Calhoun warned that a prolonged trade deadlock between the US and China threatens the comeback of its 737 Max and, ultimately, the company’s longstanding role as a US industrial champion.

China will be one of the world’s hottest aviation markets as the coronavirus pandemic recedes, accounting for about a quarter of expected growth in jet sales over the next decade, Calhoun said Thursday. But without an agreement in place to restart purchases and deliveries, Boeing can’t be sure when to raise output of the Max, the company’s main source of revenue and cash.

“If I’m not allowed to serve, I cede global leadership," Calhoun said of the Chinese market, speaking at a virtual Bernstein conference. “I’ll never give up on that. But it’s going to create real issues for us in the next couple of years if we can’t thaw out some of the trade structure."

Unlocking China looms as a critical challenge for Boeing now that the Max has returned to service in most of the Americas and Europe, and rising vaccination rates spur a rebound in air travel. China, the first country to ground the Max more than two years ago after two deadly crashes, has yet to lift its ban on flying the plane. The country’s airlines last announced orders for the single-aisle workhorse when Barack Obama was in the White House.

In a wide-ranging discussion with Bernstein analyst Douglas Harned, Calhoun offered frank assessments of everything from Airbus SE’s strong-selling A321XLR jetliner -- “I like everything about it" -- to his strategic thinking.

Curtailed Ambitions

The CEO acknowledged Boeing’s curtailed ambitions for its services division, which has been hard-hit by market turmoil. The company intends to invest in offerings that stand out from those of competitors, such as its Jeppesen flight-planning tools, he said. Boeing will offload products that don’t provide a return on capital.

Calhoun hinted that the Chicago-based company is open to an outsider to replace Greg Smith, who is retiring as chief financial officer next month, saying that he prized manufacturing experience above a grounding in aviation. “If I could duplicate Greg, I’d do it," he said.

He also outlined some of the next steps for Boeing’s product strategy. He predicted that a freighter version of the 777X would one day out-duel an Airbus A350 cargo-hauler, while noting that the Boeing board hasn’t yet approved launching such a model.

He disputed the widespread view that Airbus’s A321XLR, a single-aisle plane with the range to cross the Atlantic Ocean, will give the European manufacturer an insurmountable lead over Boeing in the lucrative narrow-body sector.

“It’s a good airplane," Calhoun said of the long-range A321, acknowledging that Boeing doesn’t have an offering in the jet’s product niche. “The notion that the XLR somehow sweeps the market or garners some giant share that differentiates the portfolio shares of our two great companies? I don’t think so."

Jet Plans

As for Boeing’s countermove, he said, “it won’t be all that long before we announce ours." An all-new Boeing jet wouldn’t be targeted solely to the same midrange patch dominated by the Airbus aircraft.

“If we believe it’s a select and niche market, we’re going to want to tackle something much bigger," he said.

As for China and the US, both countries want to resume some of the flow of commerce that has bolstered their economies for a half-century, Calhoun said. Restoring trade could help build a broader framework for the welter of issues that have contributed to frosty relations, from intellectual property and human rights to the source of the Covid outbreak.

“I don’t know when that moment of thawing begins," Calhoun said. “I do know that if it goes on too long, I pay a price."


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This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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Published: 04 Jun 2021, 05:40 AM IST
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