Exclusive-Boeing, Airbus to share Taiwan’s China Airlines passenger jet order, sources say

By Ben Blanchard and Tim Hepher

TAIPEI/PARIS (Reuters) – Taiwan’s China Airlines is nearing a decision to split a multi-billion-dollar order for long-distance passenger jets between Airbus and Boeing (NYSE:BA), while an order for freighters hangs in the balance, industry sources told Reuters.

The decision will come as the United States’ presidential election ended with the Republican Donald Trump sweeping back into office, and Taiwan keen to ensure the new U.S. government understands Taipei’s desire to ensure strong relations continue.

Taiwan’s largest carrier has been weighing Boeing’s 777X and the Airbus A350-1000 as replacements for its fleet of 10 Boeing 777-300ERs and to provide capacity for future growth.

The sources said China Airlines could order as many as 20 passenger jets to be split equally between the two plane giants, while the choice of freighters was at least partly being weighed against the backdrop of U.S. presidential elections.

Such a deal for the passenger jets would be worth almost $4 billion after typical industry discounts, according to estimated delivery prices from aviation consultancy Cirium Ascend.

A final decision depends on the airline’s board, the sources said.

China Airlines told Reuters that it plans its fleet “based on market demand and corporate developments, and carefully studies the relevant technical and commercial conditions to select the most appropriate aircraft type”.

Airbus and Boeing declined comment.

Multibillion-dollar deals for new aircraft often have to take political as well as business considerations into account – especially in the case of Taiwan, given its international situation and pressure it faces to give in to China’s sovereignty claims, which are rejected by the democratically elected government in Taipei.

The U.S. is Taiwan’s most important international backer and arms supplier despite a lack of formal diplomatic ties, and China Airlines’ majority owner is the Taiwan government.

Trump’s first administration strongly supported Taiwan, but comments he made on the campaign trail saying the island needed to pay for Washington’s protection and that Taiwan stole U.S. semiconductor business unnerved Taipei.

Taiwan’s government swiftly congratulated Trump on his election win and says it is confident of strong ties.

Industry sources say Taiwan has traditionally been seen as one of several key markets where the diplomatic context can help to sway a purchase decision one way or another, on top of the stringent technical evaluations carried out by airlines.

Last month, however, the airline’s chairman denied it was facing any political pressure over its fleet decisions.

Hsieh Shih-chien told reporters that only China Airlines itself made the assessments about which aircraft to buy.