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Boeing set for $2B order
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August 8, 2001: 11:56 a.m. ET
China said near pact for 36 737s, clearing diplomatic obstacles
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NEW YORK (CNNfn) - Sales of commercial jets to China by Boeing Co. are back on the runway and reportedly are about to be cleared for takeoff as improved diplomatic relations are expected to give a boost to the largest U.S. exporter.
The Wall Street Journal reported Wednesday that China's State Development Planning Commission approved a $2 billion order last week for 36 Boeing 737-700 and 737-800 narrow-body jets. But the approval has yet to be announced, and a spokesman for Boeing (BA: down $1.07 to $56.43, Research, Estimates) said the company couldn't comment until the formal announcement by a different body there, the General Administration of Civil Aviation of China.
"We are in discussions with the airlines and the government concerning their specific needs and we are optimistic at some point in the future we will have an order but right now we do not have an order or any announcement to make on the subject," Bob Saling, a company spokesman, told CNNfn.
President Bush plans to visit China in October, and it is possible an announcement could be made during or just before that visit, according to a executive of one of the airlines who spoke with Reuters.
Relations were strained between the United States and China earlier this year over a collision between a U.S. spy plane and a Chinese fighter jet just off China's coast. The U.S. plane managed to land successfully on Chinese soil, but its crew was temporarily held by the Chinese until U.S. officials expressed regret for the incident.
Boeing CEO Phil Condit said shortly after that incident that the company's orders with China are more at risk due to diplomatic problems than much of the business between the two nations.
"We are a pretty high visibility player, and that always puts us on the front line," he said while discussing the company's first quarter results. But he said at the time he was confident that long-term sales prospects in China remained strong.
"With China, there are always several major bumps along the way," he said. "I don't see any major long-term shift there and I remain optimistic about the China market."
Joseph Nadol, an analyst with J.P. Morgan, said that the $2 billion order was one of those apparently held up by the spy-plane dispute. He said while it's good news for Boeing if this is back on track, it's not necessarily a sign that all problems are over.
"Who can say what the next issue will be?" he said. "It's never going to be a near-term clear sailing. It's going to be a case by case basis."
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Boeing estimates that China will need 1,790 new commercial jets by 2019, while competitor Airbus Industrie estimates it will need 1,600 jets. That would make the nation the world's second-largest market for commercial aircraft after the United States.
Sales to China are more important right now as a slowdown in the U.S. and European economy is cutting profits and plane purchases by major carriers in those markets. 
-- from staff and wire reports
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