China Southern Cancels Boeing 787 Sale

China Southern Airlines has reportedly suspended plans to sell its fleet of Boeing 787-8s as trade tensions escalate between China and the United States.

As tensions between China and the United States rise considerably with each passing day, airlines are being forced to reassess previous decisions, including the sale of jets.

The risk of current trade tensions is the ability of China Southern, the broader country, to take on new planes following China’s confirmation that it would reject any new commercial aeroplane delivery from Boeing.

As a result, while the 787s were initially placed for sale, they are now expected to stay as concerns emerge over the ability to acquire new planes and what means to meet capacity.

China’s Southern’s move is just one of the many unfolding recently. It has seen the prioritisation of older aircraft or planes meant to be axed because they could not take on generation jets or move ahead with fleet renewal efforts.

While ultimately, each set of circumstances is different, the forced readjustment of airlines’ fleet balance remains a relevant topic of conversation, as is obvious from this trade war in comparison to a global pandemic.

What China Southern Was Planning

China Southern only two weeks ago reaffirmed its intention to sell its fleet of Boeing 787-8s.

Driven by reporting from Fast Technology, China Southern listed 10 Boeing 787-8 jets for sale. The listing included 2 GENX-170 engines, which were visible via the Shanghai United Equity Exchange.

Despite the jets being put up for sale, no buyer had emerged at the time, but the 787-8s could have provided an airline with an immediate capacity increase.

China Southern stated that the minimum price for each aircraft started at USD 50 million. This figure is significantly lower than the list price value for this aircraft but aligns with the state of the jet being older and used.

Fleet data indicates the Chinese carrier has precisely 10 of the 787-8 models to its name, averaging an age of 11.6 years.

What Is Happening Between China, The U.S. & Boeing

China and the United States’ trade war has escalated tenfold in recent months, and now, Boeing is being brought into focus with fresh impacts.

According to fresh reports, China has informed all its airlines to stop taking delivery of new commercial airplanes produced by Boeing.

This act follows a long-standing trade war that has seen tensions rise on several occasions across the last decade between China and the United States.

The retaliation act will essentially prevent the production of any new plane produced by Boeing that is destined for a Chinese operator, putting output rates in limbo.

No company necessarily benefits from this measure, with the impact on Chinese airlines being felt by those who rely on these new planes to fuel their growth.

Meanwhile, if Boeing’s output rates are impacted, this would further hurt them financially and force these planes to be sent elsewhere, depending on the contractual obligations and clauses in place.

The measure, however, is being only imposed as a last resort; this is clear, for the impact on the industry is too huge for the knock-on effects to be considered.