Boeing prepares to resume plane deliveries to China as tariff war eases

A Boeing 737 MAX, painted for Xiamen Airlines, departed Seattle for China, signaling a potential resumption of deliveries halted in April due to U.S.-China trade tensions. Deliveries were stopped in response to tariffs imposed by President Trump. The move follows a May 12 agreement to roll back tariffs for 90 days and Boeing CEO Kelly Ortberg's statement that Chinese airlines would resume deliveries in June, suggesting a thaw in trade relations and a positive outlook for Boeing's China business, which represents approximately 10% of its commercial backlog.

Analysis

A Boeing 737 MAX, liveried for Xiamen Airlines, has departed Seattle potentially en route to China, marking a significant development as this could signal the resumption of deliveries to Chinese customers, which were halted in early April due to U.S.-China trade tensions and retaliatory tariffs. This movement follows a U.S.-China agreement on May 12 to roll back tariffs for 90 days and a statement by Boeing CEO Kelly Ortberg on May 29 anticipating Chinese airlines would resume taking deliveries in June. The Chinese market is critical for Boeing, accounting for approximately 10% of its commercial backlog; Boeing had planned for 50 jets to go to Chinese carriers during the remainder of the year, with 41 of these already in production or pre-built. Prior to this potential resumption, Boeing had repatriated at least three 737 MAX jets from its Zhoushan completion center in April and was reportedly considering reselling dozens of aircraft earmarked for China. If sustained, the restart of deliveries would positively impact Boeing's inventory levels and delivery targets, mitigating recent headwinds, although the situation remains contingent on ongoing trade relations, with U.S. and China representatives scheduled to meet on June 9 to discuss a trade deal.

Key Decisions for Investors

• Investors should view this as a cautiously optimistic sign for Boeing, potentially alleviating concerns regarding its significant exposure to the Chinese market and inventory build-up.
• Monitor upcoming U.S.-China trade talks on June 9 and seek official confirmation from Boeing or Chinese authorities regarding a sustained resumption of deliveries, as this will be pivotal for Boeing's near-term revenue and earnings.
• Consider the potential positive impact on Boeing's stock if deliveries to China fully resume, given that China represents a substantial portion of its order backlog and future growth.