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Business

Boeing's problems in China go far beyond the latest grounding

March 29, 2022 12:04 pm

Another Boeing plane has been grounded after a fatal crash, this time in China. That may be the least of the company’s problems in a crucial market.

The decision to ground the Boeing model 737-800 was made by China Eastern Airlines, which operated the jet that crashed March 21, killing all 132 on board. The cause of the crash has yet to be determined, and the grounding could be lifted soon if it turns out the cause was not mechanical.

But Boeing has plenty of other troubles in China, the world’s largest aviation market. It is on the verge of being virtually shut out of the region as trade tensions between the United States and China have basically halted Boeing sales in the country for the last four years. The company has not announced any sales to a Chinese passenger airline since November 2017. Only six months ago, Boeing projected the Chinese market would be worth $1.5 trillion in commercial aircraft purchases over the next 20 years.

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It takes a long time to build and deliver planes after they’re ordered, and Boeing continued to deliver jets to China’s airlines and leasing companies in 2018 and early 2019. But only 40 of them have been delivered since March 2019. That’s when aviation authorities around the globe grounded Boeing’s bestselling jet, the 737 Max, after two fatal crashes were found to have been caused by a design flaw. That grounding stretched on for 20 months.

The US Federal Aviation Administration cleared the plane to carry passengers again in November 2020, with most other countries’ aviation authorities following close behind. Airlines that owned the 737 Max were soon flying the plane again.

But not in China, where the aviation regulator — one of the first to ground the Max after the second accident — waited another year to clear the plane to fly. Chinese airlines that own the planes still have not returned them to service.

“We would now expect further delays to Chinese reinstatement of the 737 Max while this accident is investigated, at least until a likely cause is identified,” said a note this week from Melius Research.