July 13, 2024

Boeing Deliveries to China Stalled by Regulatory Review

Boeing’s plane deliveries to China face delays due to a regulatory review of cockpit voice recorder batteries by Chinese authorities.

Image Source: Reuters

Recent weeks have seen Boeing’s (BA.N) aircraft deliveries to China come to a standstill due to a review by the Chinese Civil Aviation Administration (CAAC) of the batteries used in the cockpit voice recorders. The U.S. aerospace giant is currently collaborating with Chinese customers to determine the timing of deliveries as this regulatory review proceeds.

In its end-of-2023 report, Boeing disclosed having approximately 140 737 MAX 8 planes in inventory, 85 of which are intended for Chinese customers. While Boeing managed to deliver 22 planes to China up until the end of April 2024, deliveries have since been paused pending the CAAC’s review. The review concerns the 25-hour cockpit voice recorder (CVR) batteries, which store more data than previous versions and have already been approved by the Federal Aviation Administration (FAA) and European regulators.

Boeing’s CFO, Brian West, assured investors that the company still aims to deliver most of these planes by the end of the year. However, the duration and impact of the CAAC’s review on Boeing’s delivery targets remain uncertain.

Tensions between the U.S. and China continue to affect trade, with new U.S. tariffs on Chinese goods set to begin on August 1. Additionally, China’s Commerce Ministry announced restrictions on certain U.S. firms, including Boeing Defense, Space & Security, from engaging in import and export activities related to China.

This regulatory hold-up is particularly significant as aircraft deliveries are closely monitored by Wall Street, given that manufacturers receive most payments upon delivery. Boeing had resumed deliveries of its 737 MAX jets to Chinese airlines earlier this year, following a nearly five-year freeze due to safety concerns from previous crashes.

Boeing remains committed to working with both the FAA and CAAC to resolve the ongoing regulatory issues and resume its delivery schedule to China.

About The Author

Leave a Reply

Your email address will not be published. Required fields are marked *

Send this to a friend