TLDR
- Boeing stock rose 1.9% Monday after US-China trade tension eased with both countries agreeing to reduce tariffs to about 10% for 90 days
- China reportedly removed its ban on airlines taking deliveries of Boeing jets
- Boeing’s commercial jet backlog includes about 160 Chinese-bound jets (3% of total backlog)
- President Trump is considering using a Qatari Boeing jet temporarily due to delays with new Air Force One delivery
- Design changes for quieter Boeing engines resulted in slightly lower efficiency rates
Boeing’s stock climbed yesterday as investors responded positively to progress in US-China trade talks. The aerospace giant has faced challenges on multiple fronts, from trade tensions affecting its Chinese deliveries to ongoing delays with the Air Force One contract.
The stock rose 1.9% on Monday after the United States and China agreed to reduce tariffs to about 10% for the next 90 days. This marks a major improvement from previous tariffs that reached over 100%.
These high tariffs had effectively created a trade embargo. Boeing was caught in the crossfire last month when China prohibited imports and began returning planes to Seattle.
According to Bloomberg, China has now removed its ban on airlines taking deliveries of Boeing jets. This reversal could open up a crucial market for the company.
Boeing’s current commercial jet backlog stands at approximately 5,600 jets. Of these, about 160 are bound for China, including Hong Kong.
While this represents just 3% of Boeing’s backlog, the figure understates China’s importance to the company. In 2018, before the 737 MAX grounding, China accounted for roughly 25% of Boeing’s deliveries.
Air Force One Complications
Meanwhile, Boeing continues to face challenges with its Air Force One contract. The current presidential aircraft is 40 years old, prompting President Trump to order two new planes.
However, Boeing has delayed the project significantly. The new Air Force One is now set to be delivered in 2027, potentially after Trump’s second term ends.
In response to these delays, the Qatari government has offered one of its Boeing jets for presidential use during Trump’s tenure. The offer describes the aircraft as “a palace in the sky.”
The deal is reportedly under consideration but has drawn criticism. The Air Force is already in talks with Boeing to modify requirements and accelerate delivery.
Engineering Trade-offs
Boeing has also faced technical challenges with its engine designs. Recent modifications aimed at producing quieter engines have had unintended consequences.
The company removed “serrations” or “chevrons” from the back of engines. While the older design produced noise reduction, it didn’t improve aerodynamics.
The newer, quieter engines operate at slightly lower efficiency rates. In the competitive airline industry, where success often hinges on small efficiency margins, this trade-off has created new challenges.
Despite these various issues, Wall Street remains generally positive on Boeing stock. Analysts have assigned a Moderate Buy consensus rating based on 14 Buys, three Holds and one Sell in the past three months.
After rising 9.2% over the past year, Boeing shares traded at $199.66 in Tuesday’s premarket session, with analysts setting an average price target of $201.65.
The stock continued its upward movement early Tuesday, climbing 0.6% in premarket trading while broader market indicators like the S&P 500 and Dow Jones Industrial Average futures were down 0.3%.
Boeing expects China will need almost 9,000 planes over the next 20 years to meet growing air travel demand. This represents approximately 450 planes annually.
The company hopes to capture at least half of this market, sharing it with European rival Airbus, which currently holds about 6% of its backlog for Chinese customers.
With US-China trade tensions cooling, Boeing may now have an opportunity to rebuild its position in this key market and address its delivery challenges.
