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

Boeing appears to be resuming 737 MAX deliveries to China, with a Xiamen Airlines-liveried jet departing Seattle for a route typically used for deliveries to China; deliveries were halted in April amid escalating U.S.-China trade tensions. The resumption follows the agreement on May 12 to roll back the bulk of tariffs for 90 days and comments from Boeing CEO Kelly Ortberg on May 29 indicating Chinese airlines would resume taking deliveries in June. China represents approximately 10% of Boeing's commercial backlog, making this a key market for the company.

Analysis

Boeing (BA) appears to be resuming deliveries of its 737 MAX aircraft to Chinese customers, a significant development as China represents approximately 10% of the company's commercial backlog. This resumption is signaled by a Xiamen Airlines-liveried 737 MAX that recently departed Seattle on Friday, following a route typically used for deliveries to Boeing's completion center in China. Aircraft deliveries to Chinese customers had been abruptly halted in early April due to escalating U.S.-China trade tensions and associated tariffs. The current positive momentum follows a May 12th U.S.-China agreement to roll back the bulk of tariffs for 90 days, and supportive commentary from Boeing CEO Kelly Ortberg on May 29th, who anticipated Chinese airlines would resume taking deliveries in June. Boeing had previously planned for 50 jets to be delivered to Chinese carriers during the remainder of the year, with 41 already in production or pre-built, and the prior halt had raised concerns about reselling these aircraft. This development, which carries a 'strongly positive' sentiment score of 0.6 and a BA-specific sentiment of 0.7, suggests a potential easing of inventory pressures and a positive outlook for revenue recognition from this key market.

Key Decisions for Investors

• Investors should consider the resumption of Boeing's 737 MAX deliveries to China, a market representing 10% of its commercial backlog, as a material positive development that could alleviate inventory concerns and support near-term revenue targets, specifically the planned delivery of 50 aircraft to Chinese carriers this year.
• It is crucial to monitor the outcome of the U.S.-China trade negotiations, with representatives scheduled to meet on June 9th, as the current 90-day tariff rollback is temporary and a more permanent resolution is needed to secure long-term delivery stability to this vital aviation market.
• Sustained delivery rates to China will be a key performance indicator to watch, reflecting both the health of U.S.-China trade relations and Boeing's ability to execute on its significant order book in the region.