“We would now expect further delays to Chinese reinstatement of the 737 Max while this accident is investigated, at least until a likely cause is identified,” said a note this week from Melius Research.
In 2017 and 2018 China accounted for more than 20% of Boeing’s global deliveries, but since the start of 2020 the percentage has dropped to below 5%. (Boeing gets most of its revenue when a plane is delivered.)
Some experts believe Boeing has reached agreements to sell some planes to Chinese airlines in the last four years, either through a leasing company or via sales in which the name of the buyer is not made public. But no aircraft orders are official without approval from the Chinese government, which views plane sales as leverage in its negotiations with the United States on overall trade issues, said Richard Aboulafia, aerospace analyst with AeroDynamic Advisory.
Boeing CEO Dave Calhoun told investors in October, “We remain in active discussions with our Chinese customers on their fleet planning needs and continue to urge leaders in both countries to resolve trade differences.”
The longer the current grounding drags on, the more Boeing is at serious risk of losing out on the Chinese market, analysts say.
“Boeing has its fans over there. But a political mandate in China is a political mandate,” Aboulafia said.
He and other experts expect Boeing will eventually get back some sales and deliveries in China, but at a much lower number than it was counting on just a few years ago.
China “can get some planes they need from Airbus, but they can’t get all their planes from Airbus,” said Ronald Epstein, aerospace analyst with Bank of America. Aboulafia describes the relationship between China and Boeing as a “bad marriage with no possibility of divorce.”
The only good news for Boeing is China’s aviation sector is not as important as it appeared it would be a decade ago, when experts were projecting the market would account for 30% of all global commercial jet purchases. China’s aviation industry was slowing even before the pandemic, Aboulafia said, from a 12.2% growth rate in 2018’s fourth quarter to 5.3% a year later, just before the outbreak of Covid came to light.