Boeing announced a $16.6b deal on Sunday to sell planes to Iran, which for decades had been economically blacklisted by the United States. The company instead chose to emphasise how many jobs the sale would support. “Today’s agreement will support tens of thousands of US jobs” associated with the production and delivery of the planes, Boeing said. The intended recipient of Boeing’s message clearly seemed to be President-elect Donald J. Trump. Its carefully worded statement is emblematic of the tightrope that America’s biggest exporters are walking amid his threats to shake up trade policy and undo the Obama administration’s nuclear accord with Iran. That agreement lifted the American sanctions on Iran, making Boeing’s jet deal possible. Trump has talked about imposing tariffs on imports from China and on American companies that move jobs to Mexico and other countries. But he has not said much about how some of America’s major manufacturing companies, like Boeing and General Electric, and their workers could be hurt if other countries retaliated for the tariffs or if existing trade agreements were ripped up. Boeing officials, already dismayed by Trump’s attack last week over the costs of a new Air Force One, acknowledged that the Iran jet deal still faced contingencies — a polite way of saying they were deeply worried about whether Mr. Trump and the Republican-led Congress would support it.<br/>
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Boeing has informed employees that the 777 production rate will be reduced from seven per month to five per month in August 2017, meaning the program’s production rate will be cut twice in 2017. The manufacturer had previously decided to lower 777 production from the current rate of 8.3 aircraft per month to seven monthly starting in January 2017. But 777 program VP and GM Elizabeth Lund said in a Dec. 12 message to employees that “despite tireless work by the sales team, [777] orders have slowed.” Citing “near-term hesitation” by airlines in some markets to order 777s, Lund said Boeing “must adjust accordingly to ensure we are running a healthy business and the production line remains stable.” The order from Iran Air for 15 777-300ERs and 15 777Xs, firmed Dec 11, “is good news” for Boeing, but it had already been factored into the 777 production rate assessment, Lund said. The rate cut will mean a reduction in employees, Lund said, adding, “While the exact number of affected positions has not been determined, we will do our best to lessen the impact.”<br/>
Chinese airlines are flooding the world with some of the lowest long-haul fares ever seen -- and delivering a hammer blow to foreign carriers trying to keep up. From Delta and American Airlines in the US, to Cathay Pacific Airways and Korean Air, many operators are feeling the squeeze from the extended reach of mainland Chinese carriers. They don’t just offer cheap fares on routes long-dominated by national airlines like Korean Air. They’re also adding hundreds of overseas flights from little-known Chinese cities to airports all over the world. “Chinese airlines are still hardly scratching the surface of their potential, not just in China, but globally,” said Will Horton, a Hong Kong-based analyst at the CAPA Centre for Aviation. “If an airline today cannot compete with or grow alongside a Chinese airline, the future will be bleak.” According to CAPA, mainland Chinese airlines have opened 75 long-haul markets since 2006, led by Air China and Hainan Airlines. More than two-thirds of those routes opened only in the past two years. China’s three biggest carriers -- Air China, China Eastern Airlines and China Southern -- are state-controlled and listed in Hong Kong and Shanghai. Cathay is conducting what it calls a “critical review” of its business. Delta President Glen Hauenstein said in October that China “continues to be challenged” as capacity growth outpaces demand. American Airlines President Robert D. Isom said the same month there’s “continued weakness in China” as excess capacity seeps into the airline’s new services from Los Angeles to Hong Kong, Haneda, Sydney and Auckland. A round trip with China Eastern between New York and Bangkok, via Shanghai, costs $570.06, according to Webjet.com. The same trip with United through Hong Kong costs $714.80. Flying from Los Angeles to Hong Kong with China Airlines is one third cheaper than with American Airlines. “US airlines dominated the China-US route in the past, but now it’s the Chinese airlines,” said Chen Suming, an analyst at Shanghai Chongyang Investment Management Co. “Most of the new air travelers are from China, not the US.”<br/>
The world's leading association of airlines is lowering its projection for a record industry net profit this year, while predicting a 16% drop next year due to rising oil prices. The IATA forecasts profit of $35.6b this year, down from its previous projections for $39.4b due to slower economic growth and rising costs. Profit is expected to be $29.8b in 2017. IATA CEO Alexandre de Juniac said Thursday that such 2017 profits would round out the industry's best three-year performance: "That's a very soft landing and safely in profitable territory." De Juniac cited continued economic, political and security risks, but said the industry's more resilient after years of restructuring. He cautioned profits are not evenly distributed, with the best performance centred on North America.<br/>