US-based aircraft maker Boeing Co has announced that it will halt production of its 737 MAX series, which has been grounded worldwide after two fatal crashes. Chinese experts said the move would cast a shadow on its operations in the country, and the 18-month-long trade war with the US has darkened its prospects in the fast-growing Chinese civil aviation market.
The suspension of MAX production will affect its operations in China, one of the most promising civil aviation markets in the world, industry analysts said.
About 100 Boeing MAX jets have been suspended by Chinese airlines, and that’s causing them to lose money, Qi Qi, a Guangzhou-based industry market observer, told the Global Times on Tuesday.
China Eastern has filed a claim for compensation to Boeing, and noted that the suspension of its 14 MAX jets has caused heavy economic losses, domestic news site guancha.cn reported in May.
Boeing needs to come up with a plan for its Chinese customers to replace its MAX series orders as soon as possible, Qi said.
Also, the 18-month-long China-US trade war has weighed on Boeing’s outlook in China, experts noted.
Compared with agricultural products, high-value aircraft would be a much better choice to narrow trade deficits of the US with China, Qi said.
Boeing on Monday (US time) said that it decided to prioritize the delivery of stored aircraft and will temporarily suspend production on the 737 program beginning next month, with no layoffs or furloughs expected currently. It did not disclose when production will resume.
Its shares closed at $327 on Monday, down 4.29 percent. The shares have dropped about 20 percent since March when the MAX series was grounded worldwide, according to media reports.
In March, China Aviation Supplies Holding Co, which specialized in the procurement of aircraft and the provision of aviation supplies, ordered 300 aircraft from Airbus with a total value of $35 billion, said the company’s statement.
Boeing has been attaching great importance to the Chinese market, and it has previously said that China is expected to purchase 7,690 new aircraft in the next 20 years with a total value of $2.7 trillion.
More than 50 percent of the civilian aircraft in China are Boeing-made, according to Boeing. However, experts said its market share is likely to drop in China.
The reliability and reputation of Boeing have been hit seriously due to the two air disasters, that killed more than 300 passengers and crew, and other countries have also taken a more cautious attitude toward Boeing planes, Wu Minghua, a veteran transport industry analyst, told the Global Times.
The Civil Aviation Administration of China (CAAC) announced it would halt services using Boeing 737 Max planes on March 11.
According to Boeing, the 737 MAX is the fastest-selling airplane in Boeing history with about 5,000 orders from more than 100 customers worldwide. The series had 11 customers in China, including Air China, China Eastern and China Southern.
A Beoing 737 Max. [Cover Image as File photo: Xinhua]
