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Boeing Co (NYSE:BA) Scores Major Win With Big China Deal

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Boeing Co (NYSE:BA) has recently agreed to sell 300 aircraft to 3 companies in China. The firm will also be setting up a completion plant in the region as a result. This deal sets the aircraft maker as the first U.S. firm to set up new ties with the east Asian country since Chinese president Xi Jinping began his visit to the U.S.

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China Development Bank Leasing, China Aviation Supplies Holding Company, and ICBC Financial Leasing Co, a component of the Industrial and Commercial Bank of China, are said to be the three firms on the receiving end of the deal with Boeing.

The deals are likely to be worth “tens of billions of dollars” according to Reuters. China’s ICBC Financial Leasing Co confirmed on Wednesday that it will buy 30 of Boeing’s 737-800s. These are listed to be worth $2.88 billion.

In August, Boeing upped its forecast for China’s demand of airplanes. The figure was raised by 5 percent. The firm projected that the Asian state will need up to 6,330 aircraft over the next 20 years.

“Most of the planes will be for growth, and very few will be for replacement,” said Malayan Banking Bhd. Analyst Mohshin Aziz. “The emerging middle class in China is helping to boost demand.”

China’s Growing Aviation Sector

China’s Xinhua News Agency reported Boeing to have signed a cooperation deal with the county’s Commercial Air Corporation. The deal will allow the company to build its 737 aircraft plant in the country. This will be Boeing’s first completion center outside the United States. The venture will expand a market gateway for Boeing (NYSE:BA) in Asia, allowing it to advance itself within the region, analysts comment.

Boeing stands in heated competition with Airbus, its European rival. Airbus signed a deal in July to build a second manufacturing plant in China and already has strong foothold in the region. It assembles its A320 single-aisle model in Tianjin, which flows mostly into the Chinese market. Airbus is completing agreements with the state to manufacture its wider A330 model.

China has been encouraging foreign state manufacturers to grow their base in the sector as the country’s aerospace industry grows stronger. The number of state-owned airlines in the country grows substantially as air travel around China increases. A sprout of budget airlines have also began emerging to compete with national airlines.

According to official estimates, air travel to, from and within china is expected to triple to 1.3 billion by 2034. The nation is poised to become the world’s biggest aviation market within two decades, with already one in five passengers flying within, to or from the country. The east Asian state will displace the United States as the world’s largest travel market in coming years.

The nation accounts for around a quarter of Boeing’s (NYSE:BA) deliveries this year so far. It is the airplane firm’s biggest international market.

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