Boeing shares drop 4% after China agrees to buy 200 jets: here’s why

Boeing shares fell by 4 percent after the United States (U.S.) President Donald Trump revealed that China agreed to buy 200 jets, an amount much less than expected. The type of planes and when they will be delivered remains unclear.

Earlier reports suggested that talks were ongoing between Chinese and the U.S. officials for a potential sale of about 500 Boeing jets.

Following the meeting between President Xi and Trump on Thursday, the U.S. president told Fox News, “One thing he agreed to today, he’s going to order 200 jets … 200 big ones.”

Soon after the announcement was made, the planemaker’s shares fell by 4.1 percent during market trading.

Reports suggest that China is negotiating a major deal to buy jets from European planemaker Airbus.

According to Reuters, data from Boeing reveals that Chinese placed 127 orders on average every year from 2005 till 2017; however, following the escalating geopolitical tensions and trade war between the two greatest economies of the world, the Chinese order has reduced to on average 51 per year since 2018.

China is the world’s second-biggest aviation market and Boeing’s competitors have been striving to secure deals.

Considering the population and growing demand of air travel in China, it needs to buy at least 1,000 new jets this year, according to some analysts.

According to market projections by both Boeing and Airbus, the country will require at least 9,000 new jetliners by 2045.