By Julie Zhu and Anne Marie Roantree
HONG KONG, May 28 (Reuters) – China’s commitment to buy 200 Boeing jets during a recent visit by U.S. President Donald Trump will be firmed up later this year and is only an “initial tranche” of a potentially far bigger deal, the planemaker’s CEO Kelly Ortberg said.
Investors had expressed disappointment over the size of the deal, which was much smaller than a roughly 500-plane package that sources told Reuters was under discussion ahead of a meeting between Trump and Chinese leader Xi Jinping this month.
But at a U.S. conference on Wednesday, Ortberg said his trip to China alongside Trump had been “super successful” and reopened the market to Boeing’s narrowbody planes for the first time in nearly a decade after an effective order freeze due to trade tensions between Washington and Beijing.
“It’s a good start. And I’m very confident that keeping that market open, that’s an initial tranche of aircraft, and there will be more to come,” Ortberg said.
The 200-jet commitment is an entirely new deal and does not include previously unannounced orders, according to a source familiar with the matter, who added delivery schedules had yet to be confirmed.
The jets are expected to be distributed primarily among China’s big three state-owned carriers, Air China, China Eastern Airlines and China Southern Airlines, the source added on condition of anonymity because the information has yet to be made public.
Boeing declined to comment beyond Ortberg’s remarks. China’s commerce ministry and the state-owned airlines did not respond immediately to requests for comment.
Ortberg said once the Chinese government commits to a batch of narrowbody aircraft, it allocates them to individual airlines, after which Boeing negotiates firm orders on an airline-by-airline basis.
“The initial commitment of 200 will turn into an order later on in the year,” he said. “I never had a plan to go to China and return with a packet full of 500 orders.”
COMMITMENTS IN STAGES
Trump said after his visit to China that the Boeing purchases could rise to as many as 750 planes.
China intends to buy several hundred more Boeing jets but will not announce the full order at once, opting instead to release commitments in stages, the source said.
China could later commit to purchasing a further 300 to 500 jets, potentially bringing the total to as many as 700 planes, the source said.
But that would be contingent on Boeing fulfilling its obligation to supply critical spare parts for jets already in service with Chinese airlines, which have struggled to secure components amid trade tensions between Washington and Beijing, the source added.
China’s commerce ministry confirmed the 200-jet deal last week, though it did not elaborate on the types of planes. The ministry added that the U.S. would provide supply guarantees for aircraft engine parts and components – a condition the source described as a key precondition for any further purchases.
Trump had threatened last year to impose export controls on Boeing plane parts as part of Washington’s response to export limits on rare earth minerals.
(Reporting by Julie Zhu and Anne Marie Roantree in Hong Kong; Additional reporting by Sophie Yu in Beijing; Editing by Jamie Freed)
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