Days after Chinese aviation firms grounded Boeing (BA) planes following the deadly crash, rival aircraft maker Airbus this week won a multibillion-dollar contract from the Asian country. China being its biggest market, the latest development is definitely bad news for Boeing.
The $35-billion contract – for 290 A320-series and 10 A350 planes that compete with Boeing’s 737 MAX – was signed when Chinese president Xi Jinping visited Paris. The order has been pending since the heads of the two countries first agreed on it during a meeting more than a year ago, though on a smaller scale at that time.
The shift in market share comes at a time when Boeing is already facing headwinds from the ongoing trade war between Washington and Beijing. In the wake of the recent crashes involving Boeing aircraft, in Indonesia and Ethiopia, the odds of China switching to Airbus are very high. Realizing its bright prospects in the Asian market, Airbus is reportedly preparing to expand capacity at the Tianjin production facility.
The shift in market share comes at a time when Boeing is already facing headwinds from the ongoing trade war
The new order comes as a boost to Airbus which had a lackluster start to the year, registering historically low deliveries in the first two months. China has been witnessing a spurt in air travel due to the improvement in the spending power of its middle-class population.
The troubles of Boeing are unlikely to end in the near future as it faces the Herculean task of fixing the snags and proving to the world that the 737 MAX planes are airworthy. Meanwhile, the chief executive officer of Ethiopian Airlines, which operated the ill-fated Boeing plane, said Monday that the companies will continue their business partnership despite the recent tragedy. The comments of Gebremariam come even as Boeing is taking steps to fix the software system that could have caused the accident.
Boeing shares are yet to recover from the massive fall that followed the grounding of its aircraft across the world earlier this month. In January, the stock had climbed to an all-time high after slipping to a one-year low a month earlier.