Boeing 737 MAX still key to restoring confidence in China as US aerospace giant faces ‘challenging times’

China Eastern Airlines flight MU5735, which crashed the Guangxi autonomous region on Monday, was a Boeing 737-800
Boeing is still trying to regain confidence within the Chinese market after the 737 MAX was grounded in 2019 after two fatal crashes in Indonesia and Ethiopia

China Eastern Airlines flight MU5735 crash

Amanda Lee

Published: 2:00am, 25 Mar 2022

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Boeing has long found itself entangled in the long running trade tensions between Beijing and Washington, but restoring confidence in its key Chinese market is still dependent on the return of the grounded 737 MAX, analysts said.

China Eastern Airlines flight MU5735, which crashed in the Guangxi autonomous region on Monday, was a Boeing 737-800, which is an older version of the 737 MAX that has been grounded in China since 2019 after 346 people died in two fatal crashes in Indonesia and Ethiopia.

The cause of this week’s crash, which is China’s most fatal commercial passenger airline crash in more than a decade, is yet to be determined.

Both planes belong to the 737 series, and are commonly used on shorter routes, although the 737 MAX can fly farther and carry more passengers than the previous generation of 737s.

Airlines around the world began returning the 737 MAX to service in 2021, while the Civil Aviation Administration of China (CAAC) issued an airworthiness directive last year and said that it expected airlines would resume commercial operations at the start of 2022.

Now that the rest of the world has pretty much restarted the MAX, the biggest remaining customer in the region is China. They are definitely watching this very carefully, given the current situation

David Yu

“The crash involving the 737-800 is under investigation and we will soon find out the cause of the tragedy. As for the MAX, all issues relating to its grounding have, in my view, been resolved and it will be entirely at the discretion of the CAAC to decide when Chinese airlines can officially fly it again,” said Shukor Yusof, founder of aviation consultancy Endau Analytics.

Last year, Boeing raised its forecast for China’s aircraft demand to 8,700 new planes until 2040, which was 1.2 per cent higher than its previous prediction of 8,600 planes made in 2021.

“China delivery is significant to the success of the MAX for Boeing,” said David Yu, a professor of finance at New York University Shanghai, who specialises in aviation financing.

“Now that the rest of the world has pretty much restarted the MAX, the biggest remaining customer in the region is China. They are definitely watching this very carefully, given the current situation.”

02:22

Black box from crashed China Eastern Airlines flight found

Chinese airlines have conducted a number of test flights with the 737 MAX since the end of last year, and it was reported last week that a jet had taken off from Seattle en route to Boeing’s completion plant in China.

“I think Boeing is still such a critical player in global aviation, and while it has to find its way through challenging times, it will recover and build on its market position, but there is no room for complacency and it has to demonstrate that lessons have been truly learned,” said John Strickland, director of aviation at consultancy firm JLS Consulting.

China’s failure to purchase commercial aircraft from Boeing as part of the phase-one trade deal was viewed to be one of the “weaknesses” identified last year by US Trade Representative Katherine Tai.

Overall purchases by China under the two-year deal fell over 40 per cent short, according to a report earlier this year, and whether Boeing can advance in China depends on relations between Beijing and Washington, analysts said.

“There are many issues relating to industry, trade and regional security that China and the United States are working through. These issues go well beyond Boeing and the Chinese aerospace market,” said Douglas Royce, senior aircraft and engine analyst at Forecast International.

“The outlook for trade and industrial cooperation overall between the US and China is more negative than it once was. However, I can’t say how the relationship will evolve in the near term.”

Boeing’s 737-800 planes have had a strong safety record over the past decades, and are among the company’s bestsellers, with China a key market.

China Eastern Airlines grounded its fleet of 737-800s following Monday’s crash, according to reports by state media on Tuesday, but other Chinese airlines have not followed suit.

They will take an even more cautious approach to the Boeing files in general. It will be a matter of trust, as much as anything else

Andrew Charlton

Boeing said on Tuesday that it was in contact with the US National Transportation Safety Board and that the company’s technical experts were prepared to assist with the investigation into the crash of flight MU5735, which is being led by the CAAC.

Aviation analysts believe it could take weeks or even months to identify what caused the China Eastern flight to plunge from cruising altitude into a forested hillside near the city of Wuzhou.

The CAAC said on Wednesday that the plane’s cockpit voice recorder, one of the two black boxes on board the aircraft, had been found.

“I think that the CAAC will be cautious, at least until they know what has happened, so yes, they will take an even more cautious approach to the Boeing files in general. It will be a matter of trust, as much as anything else,” said Andrew Charlton, managing director of Aviation Advocacy.