Boeing’s CEO, Kelly Ortberg, remains optimistic that the ongoing trade tensions between the U.S. and China will not impede the company’s financial recovery or its ability to meet aircraft delivery goals, despite Chinese airlines halting acceptance of Boeing planes. In a recent CNBC interview, Ortberg indicated that while Boeing had three airliners prepared for delivery to China, two were returned to Seattle due to the airlines’ refusal to take them amid escalating tariffs.
This month, China retaliated against U.S. tariffs by increasing its import tax on American goods to a staggering 125%, significantly raising the cost of Boeing’s aircraft, which typically sell for tens of millions of dollars each. Boeing had initially aimed to complete 50 orders for Chinese carriers within the year; however, Ortberg noted they are now exploring alternative buyers for these planes.
Despite the challenging climate, Boeing is redirecting its efforts to fulfil demands from other customers, stating that “we’re not going to continue to build aircraft for customers who will not take them.” Interestingly, the current U.S.-China standoff poses less of a threat to Boeing compared to previous years, thanks in part to the fact that only around 10 percent of Boeing’s order backlog, valued at approximately $500 billion, is currently tied to Chinese orders.
The company’s reputation took a hit in 2019 following the grounding of its 737 Max planes in China after two deadly crashes that resulted in 346 fatalities. Subsequent delays in resuming flights have meant that Chinese airlines only resumed using the Max model in January 2023, long after counterparts in other regions.
Boeing’s Chief Financial Officer, Brian West, highlighted that around 70 percent of the commercial aircraft set for delivery in 2025 are targeted at international clients. He also noted potential additional pressures on Boeing’s cash flows if other countries respond to U.S. tariffs with their own measures. The significance of free trade policy remains a crucial aspect for Boeing as a major U.S. exporter.
Boeing’s recent financial results display positive trends in its recovery following a series of setbacks, including production shutdowns due to labour strikes and operational issues. The company reported an adjusted loss of 49 cents per share on revenue of $19.5 billion for the first quarter, but Ortberg asserted that the recovery strategy appears to be taking effect, although it is still early in the process.