Senior U.S. and Chinese officials met in Alaska on March 18-19 in an atmosphere that appeared to be tense. However, according to media reports, hours before the meeting began, Communist Party of China’s Air China announced an agreement to order 18 planes from the U.S. worth $2.24 billion, with delivery expected by 2022.
The order was signed by Air China and GE Capital Aviation Services (GECAS), the aircraft leasing arm of General Electric. Services (GECAS).
In a filing with the Hong Kong Stock Exchange, Zhou Feng, secretary of Air China, said the deal’s “offer and overall cost were competitive” and that the strong yuan against the U.S. dollar and low interest rates were also factors in the deal.
The Chinese government has a long history of placing large purchase orders during high-level meetings with the U.S., with aircraft often previously ranking as a major product order for the Chinese side, and the industry has pointed out that the Chinese government’s choice to sign large purchase orders with U.S. companies during high-level meetings adds a political dimension to international business dealings.
Peter Huijbers, Hong Kong-based director of aircraft investment consultancy PH Aviation Asia, believes the timing of the deal for the Chinese side should have taken into account the face-to-face summit between the U.S. and China.
David-Yu, chairman of Aviation Asia Valuation Advisors and a professor of finance at New York University in Shanghai, said, “The situation is different. You’re not going to see it very often.”
Last year, during the Communist Party’s viral pandemic, Air China ordered 22 fewer Airbus planes and two fewer Boeing planes than originally planned. In all, the Communist Party’s three largest state-owned airline groups bought 111 planes from two manufacturers, fewer than planned.
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