Guangzhou, 16 April - In a significant development amid escalating trade tensions between the United States and China, China Southern Airlines Co., one of China's largest state-owned carriers, has suspended the sale of 10 used Boeing 787 8 Dreamliner aircraft. This decision, reported by Bloomberg, stems from Beijing's broader directive to its airlines to halt deliveries of Boeing jets and cease purchasing U.S.-made aircraft parts and equipment. The move is a direct response to the U.S. imposition of tariffs as high as 145% on Chinese goods, prompting China to retaliate with 125% levies on U.S. imports, effectively doubling the cost of Boeing aircraft for Chinese carriers. This tit-for-tat trade war, intensified by U.S. President Donald Trump's policies, has disrupted China Southern's plans to replace its older Boeing widebodies with newer, larger aircraft better suited for its extensive long-haul network.
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China Southern, based in Guangzhou, operates a fleet of 932 commercial jets and carried 165 million passengers in 2024, making it one of the world's largest airline groups. The airline had intended to sell the 10 Dreamliners through the Shanghai United Assets and Equity Exchange, but notices posted on April 11 cited "events impacting the transactions" as the reason for the suspension. This decision reflects the broader impact of the trade standoff, which extends beyond new aircraft purchases to affect the secondary market for used planes. Beijing's retaliatory measures also include considerations to support airlines leasing Boeing jets, as the increased tariffs significantly raise operational costs. The financial burden could push Chinese carriers to explore alternatives from European manufacturer Airbus or China's domestic planemaker, COMAC, which is gaining traction in the market.
Boeing, a cornerstone of U.S. aerospace, faces a severe setback with this freeze. China, projected to account for 20% of global aircraft demand through 2024, is a critical growth market for the company. However, Boeing has struggled to maintain its foothold in China since 2019, when trade tensions and the grounding of the 737 MAX following two fatal crashes halted deliveries. Although Boeing resumed limited deliveries in 2024, including a 737 MAX 8 and a 787 Dreamliner to China Southern, the current trade war threatens to undo this progress. The company's shares, already down over a third since a mid-air door panel incident on a 737 MAX 9 in 2024, fell further by 0.5% to 3% in trading following the news.
The halt in deliveries is unlikely to cripple Boeing in the short term, as analysts suggest the company can redirect jets to other airlines, and Airbus lacks the capacity to fully replace Boeing in China. However, the long-term implications are significant. Chinese airlines, including China Southern, Air China, and China Eastern, had planned to take delivery of 179 Boeing planes between 2025 and 2027. The 125% tariffs render these orders financially unviable, potentially shifting market share to Airbus and COMAC. Moreover, the ban on U.S. aircraft parts could increase maintenance costs for China's existing Boeing fleet, further complicating operations. This escalating trade conflict, with tariffs threatening to stall the $650 billion goods trade between the U.S. and China, underscores the fragility of global aerospace supply chains. For China Southern, the suspension of the Dreamliner sale is a pragmatic response to an uncertain market environment, but it signals deeper challenges for Boeing and the broader U.S.-China economic relationship. As both nations dig in, the aviation industry braces for a prolonged period of disruption, with ripple effects likely to impact airlines, manufacturers, and passengers worldwide.