John Sindreu
Appearances
WSJ What’s News
The Task Force Taking On American Universities
Well, it's probably not huge, particularly to its present business. There was an analyst note out that estimates that 27 737s in this inventory were to be delivered to China this year, and some 787s and 777 freighters. And they estimate that it's a hit of around $1.2 billion in cash for Boeing. So... It's significant, but it's not massive.
WSJ What’s News
The Task Force Taking On American Universities
And of course, ultimately, Boeing will be able to deliver those aircraft to someone else. But of course, it's expensive. It takes time to reconfigure the aircraft for a new client. And also, the current situation is pretty unstable. We have had, for example, Virgin Atlantic saying that they've already seen a hit to transatlantic travel. And there is a chance that there'll be a recession.
WSJ What’s News
The Task Force Taking On American Universities
Demand for travel will fall off a cliff. And then airlines, they might still want the planes eventually, but they're not going to want them immediately. And again, this is a problem for Boeing because they're trying to get cash through the door immediately. So it's a threat, but it's not existential.
WSJ What’s News
The Task Force Taking On American Universities
It's hard to tell. Immediately, Airbus is the obvious answer. It's the only other big commercial jet maker in the world. China still buys from Airbus, even though it has basically taken in no Boeing planes in recent years, which is the other important context here.
WSJ What’s News
The Task Force Taking On American Universities
A lot of this hit for Boeing has already happened because China, both because it's trying to apply some diplomatic pressure to the US, but also it's trying to promote its own homegrown planemaker, which is Comac, is already not too keen on Boeing and has shifted purchases to Airbus. You would think this will just make that happen more.
WSJ What’s News
The Task Force Taking On American Universities
But we also have to think about the fact that Airbus cannot increase production that much. So, yeah, Airbus tends to gain, but it's not like for like. It's more that China probably will not be able to access as many Western planes as they would like.
WSJ What’s News
The Task Force Taking On American Universities
They have a lot of reasons. In fact, I would say this is a bit of a bizarre move on the part of China. The reason is in most industries, when they have tried to retaliate against the tariffs, China has had a very strong hand. We can think about, for example, Apple and the fact that 90% of the iPhone making capacity is in China.
WSJ What’s News
The Task Force Taking On American Universities
And it would have been a massive blow for Apple to have the tariffs that were initially imposed on electronics. And the US, very quickly back down from that, this is not the same. Aerospace is one of the few cases in which China has not yet managed to catch up with the US technologically.
WSJ What’s News
The Task Force Taking On American Universities
They're significantly far behind, and their attempts to build a homegrown plane-making industry are still very dependent on US components. And the US seems to have a lot of leverage. So it's true that they can score this quick shot at Boeing because Boeing is not going through a good time.
WSJ What’s News
The Task Force Taking On American Universities
But ultimately, this really doesn't seem like an industry where China has a lot to gain by confronting the U.S., rather the opposite.
WSJ What’s News
The Task Force Taking On American Universities
This really doesn't seem like an industry where China has a lot to gain by confronting the U.S. Rather the opposite. It's one of those few areas where the U.S. has quite a lot of leverage.