Boeing in Deal to Sell 300 Jets to China
September 23 2015 - 10:30AM
Dow Jones News
Boeing Co. has signed deals to sell 300 jets to China and
establish a plant to finish work on single-aisle planes destined
for the country, Chinese state media said on Wednesday.
Further details are expected later Wednesday when Chinese
President Xi Jinping visits one of Boeing's main factories near
Seattle.
The official Xinhua News Agency said the orders came from China
Aviation Supplies Holding Co. and the aircraft leasing arms of
Industrial & Commercial Bank of China Ltd. and China
Development Bank.
Xinhua didn't disclose the types of planes involved or whether
they represented new orders, or finalized deals already booked by
Boeing.
The plane maker has a backlog of 157 jets for Chinese airlines
and leasing companies as of Aug. 31, but analysts said hundreds
more planes listed as "unidentified" in Boeing's order book were
destined for China.
Boeing and rival Airbus Group SE often wait until events such as
state visits or air shows to disclose the identity of
customers.
Air traffic in China has tripled over the past decade and is
forecast to double over the next 10 years, driving demand for
thousands of new jets, according to analysts.
Boeing and Airbus have a roughly 50/50 split of the Chinese
market, and are deepening their ties with the country's
fast-growing aerospace industry.
Xinhua said Commercial Aircraft Corp. of China, or Comac would
partner Boeing in building an aircraft completion center in China
for its 737 jets. Airbus is establishing a similar facility to
finish work on its A330 twin-aisle jets.
China is now investing heavily to develop its own passenger jet
industry, and though the state-backed Comac C919 plane includes
engines from a joint venture between GE and France's Safran SA and
parts from other Western suppliers, it is years behind
schedule.
Boeing on Tuesday moved to assuage employee concerns over its
proposed plant, where workers will paint the fuselage and install
seats and inflight entertainment systems on its best-selling
737.
The new plant would be Boeing's first big manufacturing facility
overseas, and would mark a milestone for its presence in China,
which is fast becoming its most important market.
The facility is expected to handle only final steps in
completing work on 737 jets ordered by Chinese customers, according
to a person familiar with discussions on the venture.
China accounted for roughly a quarter of Boeing's single-aisle
jet deliveries this year and is expected to claim a large share of
future orders, but the company has lost ground in recent years to
Airbus, which delivered the first of its rival A320 jets from an
assembly plant in Tianjin in 2009 and now claims around half of the
Chinese market.
The prospect of Boeing moving some work to China such as
painting jets and completing their flight tests has riled Boeing's
unions.
Ray Conner, chief executive of its commercial airplanes unit,
alluded to the facility Tuesday in an internal memo viewed by The
Wall Street Journal.
"We are in important discussions with Chinese partners about our
strategic partnership in China and also possible sales agreements,"
Mr. Conner said. "I want to assure you that agreements we may reach
with our Chinese partners will not result in layoffs or reduce
employment for the 737 program in Washington state."
Doug Cameron contributed to this article.
Write to Carlos Tejada at carlos.tejada@wsj.com and Jon Ostrower
at jon.ostrower@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 23, 2015 10:15 ET (14:15 GMT)
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