Boeing’s Chief Executive, Kelly Ortberg, recently conveyed optimism regarding the company’s financial recovery, despite the ongoing trade conflict between the United States and China. Ortberg stated that this economic friction would not hinder Boeing from achieving its aircraft delivery goals, even as Chinese airlines have temporarily halted accepting their planes.
In an interview, Ortberg explained that three jets intended for Chinese airlines are ready in China, but two have already been returned to Seattle as a result of the halted acceptance by Chinese buyers. This issue stems from the newly imposed tariffs, where Beijing raised the import tax on American goods to 125% in response to the U.S. raising tariffs on Chinese imports to 145%. This change significantly elevates the costs of Boeing’s aircraft, making their pricing in China considerably higher.
Boeing, initially forecasting the completion of 50 orders for Chinese airlines within the year, is now exploring avenues to redirect these aircraft to other potential buyers. Ortberg assured stakeholders that the planes could be rapidly absorbed by other interested parties, indicating there are alternative markets ready to accept these deliveries. He emphasized that Boeing would prioritize customers who are prepared to take immediate delivery, redirecting supply to meet the steady demand.
While the current geopolitical standoff might have posed a considerable threat to Boeing in the past, the company’s reliance on China has diminished from previous levels. This decline began notably in 2019 when China was the first nation to ground Boeing’s 737 Max aircraft after two tragic crashes. These issues delayed the resumption of Max flights in China compared to the global timeline, affecting Boeing’s standing in the region.
Boeing’s Chief Financial Officer, Brian West, highlighted that China represents approximately 10% of Boeing’s current order backlog, valued at $500 billion, a pipeline expected to extend over a decade. West also mentioned that about 70% of Boeing’s scheduled commercial deliveries for 2025 are planned for international clientele. An expansion of retaliatory tariffs could, however, pressure Boeing’s financial resources if other countries follow China’s lead.
The ongoing tariffs are part of the broader strategy by the U.S. administration, led by President Donald Trump, to address what it perceives as unfair trade practices by other nations. This approach arrives as Boeing attempts to overcome prior challenges ranging from technical setbacks to labor disputes that have recently impacted production. Nevertheless, Ortberg noted signs of recovery within their first-quarter financial performance.
Boeing reported a reduced adjusted loss of 49 cents per share on a revenue sizeably reaching $19.5 billion for the quarter, surpassing analyst forecasts. Furthermore, Boeing made strides in cutting its cash burn, lowering it to approximately $2.29 billion from nearly $4 billion, showcasing progress in fiscal stabilization.
As the trade tensions reverberate through financial markets causing fluctuations and unease, U.S. Treasury Secretary Scott Bessent expressed his expectation of a future ‘de-escalation’ in trade hostilities between the two economic superpowers. Ultimately, Boeing continues to navigate the complex trade environment while striving to enhance its financial footing and stabilize operations.