More Chinese airlines could seek compensation from Boeing amid trade war

By Wang Cong Source:Global Times Published: 2019/5/21 21:58:40

More Chinese airlines could seek Boeing compensation

A passenger plane of China Eastern Airlines Photo: IC

After China Eastern Airlines became the first domestic carrier to seek compensation from Boeing Co for losses caused by the grounding of the US plane maker's flawed 737 MAX aircraft, more Chinese airlines could follow suit amid an escalating trade and technology battle between China and the US, according to industry insiders.

China Eastern formally filed a claim with Boeing asking for compensation for losses caused by the grounding of the airline's 14 Boeing 737 MAX planes and delayed delivery of more aircraft, a spokesperson for the airline confirmed to the Global Times on Tuesday.

In a statement, China Eastern said that the grounding caused "relatively large" losses, which continue to snowball as the company still awaits information from Chinese authorities and Boeing about the possibility of the planes returning to service.

The airline did not disclose further details, including how much compensation it was seeking from the US planemaker. A spokesperson for Boeing declined to comment on Tuesday, telling the Global Times that "we don't discuss our conversations with customers."

Asked about China Eastern's decision at a routine press briefing on Tuesday, Lu Kang, a spokesperson for the Chinese Foreign Ministry, said that though the ministry does not comment on companies' commercial activities, he believes that any company may pursue its legitimate and reasonable interests through legal means. "This is beyond reproach," he said.

Lu also pointed out the Boeing 737 MAX aircraft was grounded globally because it has safety risks and technical problems that were not resolved.

China Eastern's move comes as China and the US are mired in an escalating trade and technology battle after the US broke a truce and slapped tariffs on Chinese goods and banned Chinese technology company Huawei from buying US components.

"If the trade talks had not collapsed, I don't think [China Eastern] would be seeking compensation this early," an industry insider, who spoke on condition of anonymity, told the Global Times on Tuesday. "Legally, this has nothing to do with [the trade war], but in reality, it is definitely related [to the trade war]."

In the wake of heightened US pressure on China, some analysts suggested targeting US corporations that rely on the Chinese market, including Boeing and Apple. China was also the first country to order the grounding of the 737 MAX plane. 

Lin Zhijie, a veteran civil aviation industry observer based in Xiamen, East China's Fujian Province, said that more domestic airlines could follow in China Eastern's footsteps soon. 

"I think it's just a matter of time. Chinese airlines will definitely seek compensation, whether through formal or informal means, because the grounding of the MAX has caused these airlines huge losses. That is a fact," he told the Global Times on Tuesday.

More than a dozen Chinese airlines have grounded a total of 96 Boeing 737 MAX planes since March 11, when national authorities ordered domestic airlines to ground the jet after its second deadly crash in Ethiopia, which killed all 257 people on board.

Among the airlines are major carriers such as China Southern Airlines, which grounded 24 MAX planes, Air China, which grounded 15, and Hainan Airlines, which grounded 11. None of these airlines responded to requests for comment as of press time on Tuesday.

"This will be a huge test for Boeing about how to handle compensation issues and maintain a good relationship with the airlines," Lin said, noting that losses from grounding an aircraft could be "huge," though a final amount needs to be calculated and negotiated between Boeing and the airlines, which could be a long and tough process.

Newspaper headline: More Chinese airlines could seek Boeing compensation

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