Boeing's China Deliveries Hit By Regulatory Battery Review: Report

Deliveries of Boeing Co’s (NYSE: BA) aircraft to China reportedly experienced delays due to a review by Chinese regulators of the batteries used in the cockpit voice recorder.

Boeing is collaborating with its Chinese clients on delivery schedules as the Civil Aviation Administration of China (CAAC) completes its evaluation of the 25-hour cockpit voice recorder batteries, reported Reuters.

In its year-end 2023 report, Boeing disclosed it had approximately 140 737 MAX 8 aircraft in stock, with 85 destined for Chinese customers.

Though 22 aircraft were delivered to China by the end of April 2024, no new planes have been sent to Chinese buyers recently due to the ongoing review, per the report.

Boeing CFO Brian West stated last month that the company anticipates delivering the majority of these planes by the end of the year.

The duration and impact of the review on Boeing’s delivery targets remain uncertain. The U.S. Federal Aviation Administration (FAA) has certified the 25-hour CVR system, which can store more data than previous versions and is approved by European regulators.

Also Read: Justice Department Accuses Boeing Of 2021 Settlement Breach

Ongoing trade tensions between the U.S. and China have compounded the delivery issues. U.S. trade officials announced higher tariffs on $18 billion worth of Chinese goods starting August 1.

In January, Boeing resumed deliveries of the 737 MAX to a Chinese airline, breaking an almost five-year import halt. China was the first to ground MAX jets following two crashes in 2018 and 2019, which resulted in 346 fatalities.

This month, Congress passed legislation requiring all future aircraft to be equipped with 25-hour cockpit voice recorders.

Aircraft deliveries are critical for plane makers like Boeing as they receive most payments upon delivery. Recently, China’s Commerce Ministry announced restrictions on U.S. firms involved in arms sales to Taiwan from importing, exporting, or investing in China. This includes Boeing Defense, Space & Security.

Boeing stock has lost about 8% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Aerospace & Defense ETF ITA and Invesco Aerospace & Defense ETF PPA.

Read Next: Boeing’s Commercial Plane Deliveries Decline In April In The Wake Of Manufacturing Adjustments

Price Action: BA shares closed lower by 8.06% at $186.28 on Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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