Boeing to find new buyers for Max jets originally built for Chinese airlines
Boeing has been stuck with excess inventory while waiting to get delivery approval from China
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Boeing officials said Thursday they will find new buyers for some Boeing 737 Max jets that were built for Chinese airlines but can't be delivered because China's aviation regulator has not cleared the plane to fly after two deadly crashes.
Boeing hopes the move will reduce its inventory of undelivered Max jets, which built up while the planes were grounded around the world.
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However, the decision risks adding to tension between the aircraft manufacturer and China, which was once Boeing's biggest market for the Max.
Arlington, Virginia-based Boeing had 290 undelivered 737s in inventory as of June 30, with about half of them earmarked for China, company officials said. The company did not disclose how many might be resold to new buyers.
Because China's delivery approval has taken too long, Boeing officials said on Sept. 15 that they plan to find other customers. Pictured: A Boeing 737 Max jet prepares to land at Boeing Field following a test flight in Seattle on Sept. 30, 2020. (AP Photo/Elaine Thompson)
Boeing's hopes were raised last December, when China's aviation regulator took a major step toward letting airlines resume using the Max. In February, Chinese airlines ran flight tests. But the Civil Aviation Administration of China has not taken the final steps to allow Max flights and deliveries to resume, which Boeing officials blame on COVID-19 lockdowns.
Meanwhile, the company was running out patience.
"We have deferred decisions on those planes for a long time. We can’t defer that decision forever," Boeing Chief Financial Officer Brian West said Thursday. "So we will begin to re-market some of those airplanes that were otherwise earmarked for our Chinese customers."
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China "is an important market," and Boeing did not make the decision lightly, West said during a Morgan Stanley investor conference. But he expressed confidence that Boeing can find new buyers for the planes, which list at $100 million and up — although airlines routinely get deep discounts.
China is the last major market where the Max is still awaiting approval to fly. The U.S. Federal Aviation Administration approved changes Boeing made to the plane in late 2020, and regulators in Europe, Canada and Brazil have followed suit.
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The importance of the Chinese market to Boeing was underscored in July, when China's three largest airlines ordered nearly 300 planes from its European rival Airbus.
U.S. relations with China were strained during the administration of former President Donald Trump, who waged a trade war with China. On Thursday, Boeing CEO David Calhoun said free trade with China has helped the company but that recent "geopolitical events" will "slow us down."
"I think we will get back there some day," Calhoun said at a U.S. Chamber of Commerce event. "I just don’t think it’s a day soon."