China’s President Hu Jintao came to Washington bearing gifts—solidified orders for 200 and .
Hu was thought likely to bring an order of newjets as a gift when he began a summit with President Barack Obama on Jan. 19. Historically, Chinese leaders use the occasion of a state visit to announce big aircraft orders.
Boeing was as interested in what Hu would say as Obama was and even after he spoke, company officials are not sure of the details. Since 2007, Boeing has carried orders fromfor 50 737s, for 55 737s and Xiamen Airlines for 36 737s, plus substantial listings in its "unidentified customer" listings from Chinese carriers for 737s and 777s, all made up to 2010. As the summit approached, it was not clear to Boeing how many from each of these listings Hu's announcement would cover.
Wednesday morning, the Chinese leader revealed his country’s plans to purchase 185 Boeing 737s and 15 777s with a combined list-price value of $19 billion. These firm orders draw from the previous 2007-2009 list—none add to Boeing's backlog—but in exactly what proportions and for which carriers is not yet clear, a company official said.
From Boeing's perspective, the significance is that Hu has granted authority for the carriers to complete the purchases. Despite signed contracts with an aircraft maker, Chinese carriers cannot complete any airplane purchases without approval from the Civil Aviation Authority of China. That is what Hu's announcement conveys.
Beijing's largest previous group authority to buy from Boeing was in 2006 for 150 airplanes.
Delivery periods for the 737s and 777s will run from 2011 to 2013, a rapid pace of acceptance by Chinese carriers that underscores how much emphasis the country’s aviation authorities are placing on matching airline growth with capacity. Boeing estimates that in the next 20 years, China will need 4,330 new aircraft worth more than $480 billion and that the nation will be the company’s largest customer.
But in the past, Beijing has forced its airlines to delay delivery rates because China’s airport modernization and pilot training could not keep pace with demand.
Boeing said the agreement “positively impacts more than 100,000 jobs, including those at Boeing and its thousands of suppliers throughout the U.S.,” giving Chinese and U.S. officials the kind of accolade they are looking for in the Hu-Obama talks.