Boeing actively tracks the unpredictable US trade war with China as heightened tariffs forced the firm to slash its 787 Dreamliner aircraft production until either an exception or a compromise is reached.
In its third-quarter results, the firm said that Boeing would reduce monthly production of 787 aircraft to 12 a month starting around the end of next year, noting "current global trade climate." Reduced production will last for at least 2022.
Chief executive officer Dennis Muilenburg provided more details on Boeing's call to investors as to the role of his business in the White House talks - as well as what Boeing is hoping to get from even a limited trade deal.
"We do continue to monitor and advise on the US-China trade talks," Muilenburg said, noting that "we remain hopeful that aircraft can eventually form part of the trade settlement." President Donald Trump's trade war took a toll on many US companies shipping to China, covering sectors from electronics to cars to farming and more.
Muilenburg has observed that the US aerospace industry is "China's largest exporter," bringing in a yearly trade surplus of about $80 billion. Though Muilenburg sees Chinese aircraft demand to continue to grow, Boeing does not view the market coming in right now.
Boeing estimated that China will need 8,090 new aircraft over the next 20 years, worth about $1.3 trillion in total. "China clearly needs lifting power," Muilenburg said, "but the trade war ensures that at this stage we have no firm orders from China."
Boeing has positive "prospects for the long-term wide-body sector," said Muilenburg, despite the lack of exposure to China's aerospace industry. Over the next 10 years, Boeing predicts demand for nearly 1,000 "small to medium" wide-body aircraft.
But Boeing will not be able to serve China's growing market until American and Chinese leaders put ink to paper on a deal or at least an exception.
Meanwhile, Boeing received $895 million in the third quarter, bouncing back from a loss of $3.7 billion in the previous quarter.
The loss was due to a cost of $5 billion linked to the March 737 Max grounding. Following two fatal crashes that killed 346 passengers, Boeing's (BA) most critical plane was grounded.
Yet profits dropped by more than half in the third quarter from the $1.9 billion raised a year ago. And due to the lack of 737 Max deliveries, revenue dropped 21 percent. The 737 Max is the bestselling airplane for Boeing.
