The Boeing Company revised its estimate of the number of new aircraft it expects Chinese airlines to buy between now and 2038. According to Reuters, in the next 20 years, Chinese airlines will spend about $1.2 trillion on around 7,690 new planes. The current prediction is about 6 percent higher than the previous forecast of only 7,240 planes.
“The growth in China can be attributed to the country’s growing middle class, which has more than tripled in the last 10 years and is expected to double again in the next 10,” said Boeing Commercial Airplanes’ vice president of marketing Randy Tinseth in a statement, according to Reuters.
“The future of commercial aviation in China is very exciting,” he added according to Yahoo Finance.
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The Boeing Company revised its estimate of the number of new aircraft it expects Chinese airlines to buy between now and 2038. According to Reuters, in the next 20 years, Chinese airlines will spend about $1.2 trillion on around 7,690 new planes. The current prediction is about 6 percent higher than the previous forecast of only 7,240 planes.
“The growth in China can be attributed to the country’s growing middle class, which has more than tripled in the last 10 years and is expected to double again in the next 10,” said Boeing Commercial Airplanes’ vice president of marketing Randy Tinseth in a statement, according to Reuters.
“The future of commercial aviation in China is very exciting,” he added according to Yahoo Finance.
Boeing estimates that about 6,000 of the new aircraft orders would be for “single-aisle” planes, with the remainder being “wide body” units. Currently, China possesses about 15 percent of the entire global commercial aircraft fleet, but with new acquisitions, that number would rise closer to 18 percent by 2037.
China is the worlds fastest growing aircraft market, and both Boeing and competitor Airbus are looking to secure a large piece of the growing demand. Both of the aerospace companies announced that they intend to build factories in China sometime in the future.
Some experts believe that because Boeing’s prediction doesn’t factor in geopolitics, a major trade dispute between the United States and China could affect the number of contracts going to Boeing. The company’s rival, Airbus SE, is currently sitting in second place, but economic tariff’s on the United States would give the company an advantage.
Earlier in the year, China threatened to place a 25 percent tariff on several of Boeing’s older generation 737s; however, the Chinese eventually backed down. Beijing stated recently that although the country will implement counter-tariffs on U.S. goods in the event of a trade war, “large aircraft” imports would be exempt, an announcement that reveals the country’s intense desire for a larger commercial fleet.
China may also be attempting to enter the commercial aircraft market domestically. According to Yahoo Finance, the government-owned aerospace firm Commercial Aircraft Corp. of China, also called Comac, is currently conducting testing of its new “narrowbody jet.” Comac calls its new plane the C919 and claims that more than 800 orders for the aircraft have already been placed.
Boeing finished Tuesday at $345.25, up almost a percent. According to Zacks, the company’s stock increased by 1.03 percent in the last month, which puts it behind the Aerospace sector, which gained more than two and a half percent during the same time. Experts also expect the company to show earnings north of $98 billion for the year.
Hopefully, the improved China forecast coupled with the company’s securing of an $805 million Department of Defense drone contract will propel shares upwards.
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