Boeing worries about large orders from China during summit meetings

Boeing apparently has to worry about the hoped-for new large orders from China. According to insiders, hopes for further orders are dwindling in the run-up to the summit between the US and Chinese presidents. Two people familiar with the matter told the Reuters news agency. However, they also emphasized that negotiations are still ongoing.

The summit between US President Donald Trump and Chinese President Xi, currently taking place in the US, was actually expected to trigger a new round of Boeing sales to China. This had already happened successfully at a meeting of presidents in May: Afterwards, Boeing CEO Kelly Ortberg explained that the canceled contract for 200 aircraft was a "first tranche" of orders and the reopening of the Chinese market.

Investors and aviation analysts had therefore suspected that another major order would follow at the current summit - after all, a contract for up to 500 aircraft was discussed in the run-up to the spring summit. But Ortberg downplayed this prospect last week. The aircraft manufacturer is simply trying to finalize an agreement reached in May to sell 200 aircraft to China, rather than receiving commitments for hundreds more jets as hoped, insiders said.

Scott Kennedy, a China expert at the Center for Strategic and International Studies, told Reuters that negotiating new passenger jet contracts was not a top priority at the current leaders' meeting.

Rather, U.S. and Chinese officials are focused on discussions on artificial intelligence (AI) safeguards, arms sales to Taiwan and trade deals on exports of soybeans and rare earths, he said. “A lot of trade depends on these meetings,” Kennedy said. "New aircraft orders would be a win, but I don't think it's a necessity for this summit."

Expanding sales to China would be important for Boeing: According to forecasts, China is expected to order around 9,000 new aircraft by 2045 - more than any other region. But the US aircraft manufacturer has been virtually excluded from the Chinese market since 2017, while European competitor Airbus continued to expand its share in one of the world's largest aviation markets.

That's partly because the European company has a final assembly line in Tianjin - but also because relations between China and Europe have been "friendlier" than those between China and the US, said Shukor Yusof, founder of Singapore-based aviation consultancy Endau Analytics. "Boeing has lost much of its influence in our region, partly due to political factors, but mostly because of its own internal problems," he said.

There have been repeated quality problems at Boeing over the years, which even led to models in the 737 MAX family being grounded. Only in August, after years of delays, Boeing received approval for the smallest aircraft in its model family, the 737 Max, from the US Federal Aviation Administration (FAA). The larger model, the 737 MAX 10, is still awaiting approval.

The approval was an important step for the US group, as Boeing had been waiting a long time to be able to deliver the smallest version of its best-seller to customers. This approval, as well as the agreement reached with China in May, should further increase deliveries of passenger aircraft and, above all, break Airbus' dominance in China.

That would also be financially important: In the second quarter, the US group was in the red, and the adjusted loss per share of 76 cents was more than twice as high as analysts had expected on average.

Meanwhile, oil prices remain the dominant issue on the German stock market: supply fears due to the unclear situation in the Middle East war are again gaining the upper hand on the oil market. After initial losses, the prices for North Sea oil Brent and US oil WTI rose by around three percent each to $106.50 and $94.67 per barrel, respectively.

“There is still no quick diplomatic solution in sight in the Middle East,” said the chief market analyst at broker CMC Markets. "At the same time, the recent robust US economic data is putting additional pressure on the bond market because it is keeping speculation about further interest rate increases by the US Federal Reserve alive." As a result, the DAX fell by 0.5 percent to 25,289 points at lunchtime.