Chinese airlines have ramped up deliveries of Boeing 737 Max jets, providing a much-needed boost for the beleaguered US planemaker. After a nearly five-year hiatus on importing Boeing's workhorse jets, China Southern, Air China, and Kunming are now either flying or preparing to ferry newly acquired 737 Max aircraft. This surge in deliveries comes at a crucial time for Boeing, as it strives to regain its foothold in one of its largest international markets.
FlightAware data shows that the Chinese airlines have filed flight plans to transport the newly acquired Boeing 737 Max from Seattle to Honolulu, indicating that they have already taken possession of the aircraft. This development follows last week's breakthrough flight by a China Southern 737 Max, which marked the end of the import halt. Analysts and Boeing executives now believe that China's airlines could act as a catalyst to unload the company's inventory of undelivered jets this year.
Sheila Kahyaoglu of Jefferies, an analyst closely monitoring the situation, suggests that the first deliveries to China could pave the way for additional approvals and accelerate the delivery process. However, she also points out a concerning trend: the number of Max aircraft scheduled for delivery to China this year dropped by over 50% in just one week, with only 31 planes now expected to be delivered.
Nevertheless, if the deliveries do continue, they will provide a crucial source of cash for Boeing as it grapples with uncertainty surrounding the production of new models due to quality concerns raised by US regulators and disgruntled customers. In response to this, auditors from both sides have pledged to inspect Boeing's factories. The recent incident involving a near-catastrophic blowout of a Alaska Airlines Max has further heightened concerns.
For China, acquiring these narrowbody jets aligns with the country's rebounding domestic travel industry post-Covid. The pressure is further intensified by the potential repercussions of a harsh trade crackdown by US presidential candidate Donald Trump, should he come into office next year.
During Boeing's recent earnings call, CEO Dave Calhoun confirmed that China is gradually taking delivery of the aircraft, but stressed that it is a slow process. Boeing currently has around 140 Max 8 models from before 2023 stored, the majority of which are destined for Chinese and Indian customers. Clearing this backlog is a top priority for the company. However, Boeing's CFO, Brian West, expressed that modifying and repairing the already-built aircraft requires more time and effort compared to assembling new models.
Despite the challenges, Boeing remains optimistic about delivering most of these aircraft by the end of the year as it works towards shutting down its shadow factory, where thousands of company mechanics are tasked with refurbishing rather than building jets. For now, the increased deliveries of the 737 Max to China offer a glimmer of hope for Boeing's recovery in an important market.