Trade War May Boost Airbus Over Boeing — AerCap CEO Says 'No One's Going To Want To Pay That'

In the escalating trade war initiated by President Donald Trump, Boeing Co (NYSE:BA) may face significant challenges, potentially tipping the scales in favor of its European competitor, Airbus SE (OTC:EADSY).

What Happened: The increased tariffs imposed by Trump could lead to a price hike of $40 million for a Boeing 787 in a worst-case scenario. This information comes from AerCap Holdings N.V. (NYSE:AER) CEO Aengus Kelly.

As a major aircraft leasing company, AerCap would be significantly impacted by such price increases.

"In an absolute worst case scenario, say, a 25% increase across the board on tariffs, a tit-for-tat from both sides — a Boeing 787, the price will go up by $40 million. No one's going to want to pay that," Kelly told CNBC in a recent interview.

Boeing, a leading manufacturer in Mexico, could face increased costs on imported parts due to the tariffs. Last week, CEO Kelly Ortberg alerted employees about the potential cost increase on parts like landing gear imported from Canada.

Trump’s 25% tariffs on steel and aluminum have already prompted retaliation from Europe, with potential further rebuttals on the horizon. This could result in Boeing’s aircraft becoming more expensive in key European markets.

Also Read: Boeing Shares Dip In Pre-Market As 32K Workers Plan Company's First Strike In 16 Years

Conversely, Airbus may have some protection against U.S. tariffs due to its facilities in Alabama, Mississippi, and Florida. CEO Guillaume Faury indicated that the company might prioritize deliveries to non-U.S. customers if tariffs disrupt its operations.

According to Kelly, the worst-case scenario could see most airlines turning to Airbus for their new aircraft, potentially giving Airbus control of 75% to 80% of the global market.

However, he cautioned, it's still too early to fully grasp the impact of the tariffs.

Why It Matters: The escalating trade war and the resulting tariffs could significantly alter the dynamics of the global aircraft market. Boeing, already grappling with the fallout from the 737 Max crisis, could face further setbacks due to increased costs.

On the other hand, Airbus could potentially gain a significant advantage, especially if it can navigate the tariff landscape more effectively.

The outcome of this situation could have far-reaching implications for the global aviation industry.

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