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Boeing Co BA-N on Tuesday confirmed it has received an order for 787 Dreamliner aircraft from Taiwan’s China Airlines.

“We are pleased that China Airlines has selected the 787 Dreamliner to modernize their world-class fleet and look forward to working with the airline to finalize the order,” Boeing said in a statement.

China Airlines said earlier on Tuesday it would buy 16 Boeing 787 widebody planes to replace its ageing fleet of Airbus A330s following a widely-watched contest held against the backdrop of regional tensions.

The politically sensitive deal worth $4.6 billion at list prices was announced by the government-backed carrier weeks after a visit to Taipei by U.S. House of Representatives Speaker Nancy Pelosi angered Beijing and stoked Sino-U.S. trade tensions.

U.S. flagship planemaker Boeing had been widely expected to win the deal as talks by the government-backed carrier to renew its fleet coincided with attention to security partnerships amid what Taipei has called its worst tensions with China for 40 years.

Boeing has been waiting for months for approval to resume 737 Max deliveries to China despite the jet having been declared safe by Chinese authorities after a safety crisis.

While Beijing has in the past withdrawn or postponed high-profile business deals in response to U.S. or European arms sales to self-ruled Taiwan, which Beijing regards as a renegade province, civil airplane deals tend not to cause such a stir.

“Commercial business is more below the political radar,” said a senior Western aerospace industry source.

But some analysts warn that trade with emblematic U.S. companies may become the new lightning rod for tensions following Pelosi’s recent visit to Taiwan, as well as Chinese military exercises.

“Beijing has a long history of punishing Boeing and rewarding Airbus, and vice-versa, for perceived political sins. These can be committed by either the companies themselves, or the countries in which they’re based,” said Isaac Stone Fish, fonder of Strategy Risks, which studies corporate risk in China.

“For Boeing to sell planes to Taiwan, and just weeks after Speaker Pelosi’s trip to Taiwan drew a strong response from Beijing, definitely checks both those boxes,” he added.

China tends to balance jet purchases between trans-Atlantic industrial powers Airbus and Boeing over time but has effectively been off the market for five years, with demand hampered first by trade tensions and then by the pandemic.

In July, Chinese state airlines announced a deal for 292 smaller narrow-body jets with Airbus, in what sources called a carefully timed announcement, months after the deal was agreed.

Boeing has long been seen as a contender to win a Chinese order for wide-body jets like the 787 once trade tensions ease.

Boeing shares were down 1.2 per cent in midday trading.

Boeing Chief Executive Dave Calhoun said last month that 737 Max deliveries to China remained blocked by COVID-19 and a “geopolitical overhang,” in a reference to simmering trade tensions between the world’s two biggest economies.

The order from Taiwan, however, is the latest sign of a long-awaited pickup in wide-body demand and a boost for the U.S. plane maker weeks after it resumed deliveries of its premier long-haul model following a 15-month halt over production issues.

The carrier, one of the world’s biggest freight airlines, cited the 787′s cargo-carrying capacity as one of the reasons behind its selection in a contest that industry sources said pitted the 787 against the A330neo.

China Airlines, which has been profitable during much of the pandemic because of a shift to cargo services, is now gearing up for a rebound in passenger travel when Taiwan lifts quarantine rules for arrivals.

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Boeing Company
+0.09%192.12

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