After losing hundreds of billions of orders from China, Boeing unexpectedly received large orders from Chinese companies. BOC Aviation Limited recently announced that it has signed an agreement with Boeing to purchase 40 Boeing 737 MAX 8 aircraft, with deliveries scheduled for 2027 to 2028. Taking into account previous orders, BOC Aviation's 737 MAX 8 orders will bring the total to 80.
First, let's take a look at the background of BOC Aviation. Originally founded by founders in the United States and Singapore, the company is headquartered in Singapore with branches in Tianjin, London, Berlin and New York. In 2006, Bank of China acquired the company and renamed it "BOC Aviation Pte Ltd", and in 2016, the company was again transformed into a public company limited by shares, renamed "BOC Aviation Limited", and successfully listed on the Hong Kong Stock Exchange with a market capitalisation of HK$45.5 billion.
BOC Aviation is principally engaged in aircraft leasing and sales, acting as an intermediary between aircraft manufacturers and airlines. They make a profit by buying aircraft from aircraft manufacturers at group purchase prices and then renting or selling them to airlines around the world.
Now, the question arises, why didn't BOC Aviation choose to buy the C919 aircraft developed in-house? At present, the first domestic C919 large passenger aircraft has been delivered to China Eastern Airlines for a 100-hour verification flight. Based on the verification results, the civil aviation administration will assess whether China Eastern Airlines has the ability to operate safely under C919 and issue an operation license. The full launch of the C919 jumbo airliner on the market is only a matter of time. So why is BOC Aviation continuing to buy Boeing 737 MAX family aircraft?
As of September this year, BOC Aviation had a fleet of 612 aircraft, including 349 aircraft from Airbus and 257 Boeing aircraft. Despite the smaller number of Boeing aircraft, new orders will help the company maintain the diversity of its aircraft portfolio. The company has previously ordered 102 Boeing 737 MAX family aircraft, so the new order will further complement their hangars to replace older aircraft.
In addition, the C919 large passenger aircraft is still in the verification flight stage, which is expected to be completed in mid-February next year, and the C919 has not yet obtained the airworthiness certificate of European and American countries, so it may be subject to certain restrictions on global routes.
As a global player, BOC Aviation needs to source a wide range of aircraft types to meet the needs of its customers around the world.
Although the Boeing 737 MAX crashed in 2018 and 2019 that caused many countries to ground the aircraft, in recent years some countries have allowed the aircraft to resume flights. However, China has not approved a full go-around of the model. This has raised concerns among some about the potential safety risks posed by BOC Aviation's large-scale purchase of the Boeing 737 MAX.
But don't worry, Continental has been very cautious when choosing to lease or buy aircraft. Until the civil aviation administration has not allowed the full resumption of flights of the Boeing 737 MAX family, domestic airlines will not purchase this type of aircraft for passenger use. Therefore, BOC Aviation's new order for Boeing 737 MAX aircraft is mainly for countries that allow the resumption of the aircraft, such as the United States, India, Australia, Singapore and Japan.
Of course, Boeing has not given up pushing the 737 MAX to return to flight in China. In October, a Boeing 737 MAX aircraft from Mongolian Airlines landed in Guangzhou, China, the first commercial flight since the ban was imposed, sending an important signal.
Although Chinese airlines have yet to include the Boeing 737 MAX in commercial operation, it is enough to revive Boeing's hopes of returning to 737 MAX flights in China. At the same time, aircraft leasing companies like BOC Aviation are also smelling business opportunities. If China does not return to flying the 737 MAX by 2028, the company could lease or sell these aircraft to countries that allow it. But if China agrees to return to flights, BOC Aviation will become the first Chinese company to buy the 737 MAX, giving it a dominant market position.
1
BOC Aviation's large-scale order of the Boeing 737 MAX 8 aircraft revealed several important revelations. First of all, companies need to consider a variety of factors when choosing an aircraft type, including customer demand, global market, balance of aircraft numbers, etc. This helps to meet the needs of different regions and ensures a diverse aircraft portfolio. Secondly, aircraft leasing companies such as BOC Aviation carefully assess aircraft procurement decisions to ensure the safety and viability of their aircraft. In addition, companies need to flexibly respond to market changes and adjust to the policies and market needs of different countries. Finally, the domestic aircraft go-around policy has an important impact on the strategic decision-making of enterprises, and enterprises need to adjust their strategies according to policy changes to seize market opportunities.
2
BOC Aviation's decision to order Boeing 737 MAX 8 aircraft involved multiple factors. First, the company's diverse aircraft portfolio helps meet global customer needs and ensures a balanced number of aircraft. Secondly, China's domestically produced C919 aircraft are still in the verification flight stage and have not yet obtained the European and American airworthiness certificates, so BOC Aviation needs to diversify its aircraft sources. The order for the Boeing 737 MAX 8 aircraft not only replaces older aircraft, but also meets the needs of countries that have already allowed the aircraft to return to flight. Although the Boeing 737 MAX series has been questioned in connection with the crash, Chinese aircraft leasing companies carefully assess the safety and feasibility of aircraft to ensure customer trust. Finally, whether China allows the 737 MAX to resume flights will have a significant impact on companies such as BOC Aviation, which could give Chinese companies market initiative. Companies need to respond flexibly to policy changes to capitalize on market opportunities. In summary, BOC Aviation's decision to order the Boeing 737 MAX 8 aircraft reflects the complexity and challenges of the global aircraft leasing industry, as well as the company's diversification strategy and risk management.
This decision also demonstrates the diversity and fierce competition in China's aviation market. With the continuous growth of China's economy, the civil aviation industry has also shown a trend of rapid expansion. Domestic airlines need to meet the growing demand from passengers, and aircraft leasing companies play a key role in this process. BOC Aviation's aircraft procurement decision responds to this trend and reflects their sensitivity to global market dynamics.
In addition, the historical background of the Boeing 737 MAX 8 aircraft is worth mentioning. After two deadly crashes in 2018 and 2019, the aircraft was grounded worldwide and raised widespread safety concerns. While the model has gradually returned to flights in recent years, China has maintained a policy of grounding its flights, and only recently there have been signs that it may be allowed to do so. BOC Aviation's order for the Boeing 737 MAX shows that despite past safety concerns, it has conducted an in-depth assessment of the safety and feasibility of the aircraft as part of their global aircraft portfolio.
Overall, BOC Aviation's Boeing 737 MAX 8 aircraft ordering decision demonstrates the flexibility and decision-making capabilities of companies in the complex and ever-changing global aviation market. They adhere to a diversified aircraft portfolio strategy to adapt to the needs of different countries and regions, while also demonstrating a high degree of professionalism in carefully assessing the safety and feasibility of aircraft. The decision also reflects the rapid development of China's civil aviation industry and the need for companies to pay close attention to policy changes and market opportunities to remain competitive.
Going forward, BOC Aviation will continue to monitor the dynamics of the global aviation market and adjust its strategy in response to demand and policy changes. Deliveries of the Boeing 737 MAX 8 aircraft will take place between 2027 and 2028, when we will see the concrete impact of this decision. Regardless, this case study provides us with a deep insight into how companies can make decisions in the complex global aviation market to meet diverse needs and remain competitive.