Aircraft crashes to regulatory hurdles: Despite several challenges, Boeing may be benefitting big from Donald Trump's trade war

Time of India

15 hours ago

The US aerospace giant has globally been in the news for all the wrong reasons.
US President Donald Trump's trade war seems to be benefitting one aviation sector giant in America - Boeing! As Trump seals trade deals with countries around the world, he is also bringing in deals, and Boeing is reaping the rewards.
Boeing is bagging new orders through these trade deals which could prove advantageous for the company as it recovers from recent difficulties, according to a New York Times report. Additionally, these deals enable Trump to demonstrate the effectiveness of his distinctive trade strategies in supporting American industry.
Boeing's Recent Troubles
The US aerospace giant has globally been in the news for all the wrong reasons - the biggest being the recent crash of
Air India
's AI-171 aircraft which was a Boeing 787 Dreamliner.
Investigations on the cause of the crash, which killed all but onboard, are ongoing.
Additionally, Boeing faces critical challenges before it can convert its new orders into revenue. The manufacturer lags significantly in obtaining regulatory clearance for key aircraft models, including both the smallest and largest versions of the 737 Max, as well as the 777-9, which initiated FAA certification test flights twelve months ago.
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Undo
Boeing's operational difficulties have created significant setbacks. Following two tragic crashes, its bestselling 737 Max was suspended from service for approximately 24 months.
A recent Reuters report quoted FAA Administrator Bryan Bedford saying that Boeing hasn't requested the removal of the 38-plane monthly production limit for 737 MAX aircraft. The agency will conduct a thorough assessment of the manufacturer's supply chain before reaching any conclusions.
The production restriction was established by the FAA following a January 2024 incident where an Alaska Airlines 737 MAX 9 aircraft experienced an emergency situation mid-flight due to missing crucial bolts.
In June this year, The National Transportation Safety Board issued a stern critique regarding Boeing's inadequate safety measures, which led to the cabin panel blowout incident on a 737 MAX 9 aircraft in January 2024.
The incident triggered a significant crisis for the aircraft manufacturer.
According to a Reuters report, the safety board delivered a scathing assessment of Boeing's safety protocols and highlighted the company's oversight failure in installing four crucial bolts during the production of an Alaska Airlines MAX 9.
Meanwhile, Boeing's suppliers may face financial strain due to Trump's imposed tariffs, whilst potential retaliatory measures from trading partners, particularly the European Union, could adversely affect the aircraft manufacturer's business.
Boeing New Order Book
Industry experts suggest that the trade agreements could lead to additional orders, as potential buyers might feel compelled to secure their positions now to avoid future delays. Aircraft ordered at present will be delivered in subsequent years.
Recent announcements include orders for numerous Boeing aircraft from Indonesia and Japan this month, following earlier agreements with Bahrain, the United Arab Emirates, Saudi Arabia and Qatar.
However, aviation industry experts express doubt about the necessity of US trade negotiators' intervention in securing Boeing aircraft orders. The procurement of aircraft involves meticulous planning by airlines, including state-owned carriers, spanning several months to years. The limited choice between Boeing and Airbus, the sole manufacturers of large commercial aircraft, further influences purchasing decisions.
Nevertheless, analysts acknowledge the strategic emphasis placed by Trump's administration on Boeing contracts within trade agreements. This focus aligns with Boeing's significant role as a major American employer and prominent export contributor.
The financial markets have responded positively to the new order announcements, with Boeing's stock value showing consistent growth since April, coinciding with Trump's introduction of tariffs.
The company's CEO Kelly Ortberg accompanied Trump during his Middle East visit in May when the Qatar agreement was disclosed.
"If the president of the country says, 'Come with me and be certain that we sign something big that says there will be many jobs in the US,' what will you do?" said Adam Pilarski, president of Avitas, an aviation consulting firm, according to the New York Times report.
However, Pilarski and additional industry specialists advised that these orders might not be as significant as they appeared.
Trump's Role Overstated?
The specifics of these agreements remain largely undisclosed, indicating ongoing complex discussions between the aircraft manufacturer and various airlines.
A case in point from this month shows Trump's announcement of Indonesia's commitment to 50 Boeing aircraft, whilst an Indonesian official later clarified that negotiations were still ongoing between Garuda, their state carrier, and Boeing.
"I suspect these orders are, as we used to joke at air shows, MOUTHLs — memoranda of understanding to have lunch," said Richard Aboulafia, a managing director at AeroDynamic Advisory, a consulting firm.
"The real hard work of contract negotiation and finance package negotiation takes place after the president's plane has left the country,' he said according to the New York Times report.
Industry analysts suggest that many of these orders would likely have materialised regardless of Trump's involvement. In May, Qatar Airways, a significant international carrier, confirmed a substantial order of 150 Boeing wide-body aircraft.
This particular announcement was notably comprehensive in its details.
Whilst political influence may drive some orders, circumstances can shift substantially before aircraft delivery. Both Boeing and Airbus maintain extensive order books spanning multiple years of manufacturing.
Airlines retain the option to withdraw from agreements, albeit potentially losing deposits. Additionally, carriers can request delivery postponements or order reductions. Manufacturers might accommodate such adjustments, particularly if it enables them to redirect aircraft to other airlines with urgent requirements for new aircraft.
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