(Bloomberg) -- Boeing Co. may finally see a sales breakthrough for its 737 Max aircraft in China when presidents Joe Biden and Xi Jinping meet this week, ending a long commercial freeze in a critical overseas market for the US planemaker.
The Chinese government is considering unveiling a commitment for Boeing’s 737 jetliner during the APEC Summit in San Francisco, as a signal of a recent thaw between the two nations, said people familiar with the matter who aren’t authorized to speak publicly. Terms of a potential agreement are still under discussion, and could change or fall apart before the heads of state meet on Wednesday, they cautioned.
Boeing shares jumped nearly 4% in premarket trading on Monday on rising prospects for a deal with China, along with confirmation of a major widebody sale to Gulf carrier Emirates. Spirit AeroSystems Holdings Inc., the planemaker’s top supplier, gained more than 5%.
While the White House has made resuming military communications with China a top priority at the summit, the rare meeting between the two global leaders also provides an opportunity to reset trade on aerospace.
A 737 Max agreement would mark an important breakthrough for Boeing, after it lost its market lead in China to arch-rival Airbus SE. The US manufacturer hasn’t made any significant sales of its best-selling narrowbody jets in China since at least 2018, before two crashes led to a global grounding of the model. Since then, tensions between the two governments have stifled commercial dealmaking.
“I’m optimistic about the discussions that are going to occur in San Francisco,” Stan Deal, head of Boeing’s commercial aircraft unit, said in an interview Monday at the Dubai Airshow, adding that it’s too early to predict whether an agreement will be reached. “Our job is going to be, deliver airplanes one at a time and express to the Chinese the need to replace their fleets and provide growth for the future.
China’s Foreign Ministry didn’t immediately respond to a request for comment.
Read More: US Sets Military Talks With China as Priority at Biden-Xi Summit
Xi isn’t expected to unveil a formal order for the 737 Max, Boeing’s largest source of revenue, said the people. Aircraft commitments falling short of a firm sale often take the form of a memorandum of understanding or letter of intent.
One of the largest US exporters, Boeing has seen sales to China dry up as trade hostilities simmered. China is forecast by Boeing to make up about 20% of global aircraft demand over the next two decades. With travel coming back from pandemic-era lows, a deal with Boeing would ensure a flow of 737s to the nation’s airlines with delivery slots sold out through the late 2020s.
More: China Operates First Boeing 737 Max Passenger Flight Since 2019
Boeing is also preparing to deliver the first 737 Max to China since March 2019, when the nation’s regulators were the first globally to ground the aircraft. The planemaker has taken about a dozen of the planes earmarked for China out of storage, but work appeared to slow in recent weeks, Jefferies analysts said in a Nov. 6 report.
The timing of the delivery resumption isn’t tied to the ongoing diplomatic talks, said two of the people. Boeing has about 85 737 Max intended for China in storage, and restarting deliveries could help the planemaker reach its target of shipping between 375 and 400 of the jets this year.
--With assistance from Will Davies, Guy Johnson and Matt Turner.
(Updates with Emirates deal, Boeing premarket trading in third paragraph)
©2023 Bloomberg L.P.
BNN Bloomberg Picks
Group RRSP use rising as retirement savings burden 'largely on employees': experts
Do you want AI with that? Fast food chains go digital with dynamic pricing, bots
Canada tax changes to be aware of in 2024
45 cents short, $96 in fees: Court approves TD insufficient fund fees settlement
Makers of COVID-19 protective equipment seek over $5 billion in damages from Ottawa
Immigration surge fuels male population boom in Canada