China orders 300 Boeing planes worth $38bn

Sep 23, 2015, 4:35 PM EDT
A Boeing aircraft
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China ordered 300 Boeing planes worth $38 billion and the firm will build its first aircraft completion plant in that country. The massive deal was announced as President Xi Jinping makes his first state visit to the U.S., writes USA Today. The orders include 190 of the 737 model aircraft and 50 widebody planes for Chinese airlines, and 60 single-aisle planes for leasing companies. China Aviation Supplies Holding Company, ICBC Financial Leasing Co., Ltd., and China Development Bank Leasing with Boeing, will be purchasing the planes.

Hours after the Boeing deal was announced, Xi toured the company's Everett, Wash.plant where the Dreamliner 787 is built. Long-haul flights for the 787 and 777-300ER are expanding at a double-digit rate for China, which has opened 30 routes of at least 3,500 miles since 2013, according to Boeing. Boeing has projected it could sell China 6,330 planes worth $950 billion during the next 20 years. Nearly three-quarters of the planes will be single-aisle, with about 700 wide bodies. Passenger traffic is projected to grow 6.6% per year during that time, and air cargo 7%.

Machinist union members say they stand to lose work to China and were due to protest on Wednesday, notes Reuters. Boeing said on Tuesday it doesn't expect to lay off or reduce staff related to the 737 because of the new factory in China. Boeing is battling with rival Airbus Group (AIR.PA) for dominance of Chinese market, which Boeing says will need $1 trillion worth of new planes over the next two decades.

Airbus supplied 6 percent of mainland China's aircraft in 1995, but in 2008 the European plane maker put an assembly plant in China to make its A320 aircraft, which competes with Boeing's 737. Today, Airbus planes account for about half the in-service fleet. Last week Airbus opened an A320 factory in Alabama, its first on U.S. soil. Boeing's China venture would be less ambitious. Planes built at Boeing's Renton, Washington, factory would be flown to China for interior installation, painting and delivery to customers. During the factory tour, Xi walked through a 787 Dreamliner, touching the blue seats and admiring the space between them. Boeing Commercial Airplanes Chief Executive Ray Conner demonstrated the dimmable window function on the high-tech 787.