Air China and its subsidiary Shenzhen Airlines have placed orders for 55 Airbus aircraft with a combined list value of about $12.4 billion, underscoring China’s long-term commitment to expanding aviation capacity and modernizing fleets with more fuel-efficient aircraft.

This is happening as Boeing receives a regulatory boost in the United States.

According to a filing with the Shanghai Stock Exchange, Air China will purchase 15 Airbus A350-900 wide-body aircraft, while Shenzhen Airlines will acquire 40 Airbus A320neo-family narrow-body jets.

The A350-900 aircraft carry a combined list price of about $6.09 billion, based on Airbus’ January 2025 catalogue prices, and are scheduled for delivery between 2030 and 2032. The A320neo-family aircraft are valued at approximately $6.35 billion, based on January 2024 list prices.

Air China noted that the actual purchase price will be substantially lower than the published list value because Airbus provided significant discounts, a common practice for large commercial aircraft orders. The purchases will be financed through a combination of internal funds, commercial bank loans, and other financing arrangements.

The order reflects the continued recovery of China’s aviation sector as airlines position themselves for sustained growth in domestic and international travel over the next decade.

Air China said the new aircraft will optimize its fleet structure, expand and improve its route network, enhance operational efficiency, and lower operating costs through improved fuel economy and maintenance performance.

The acquisition also aligns with the broader industry trend toward replacing older aircraft with next-generation models that consume less fuel and produce lower emissions, helping airlines improve profitability while meeting stringent environmental standards.

The Airbus A320neo family, one of the world’s best-selling single-aisle aircraft, is primarily used on domestic and regional routes. Equipped with new-generation engines and aerodynamic improvements, the aircraft delivers roughly 20% lower fuel consumption and carbon emissions compared with earlier-generation narrow-body jets, making it particularly attractive for airlines operating high-frequency services.

The A350-900, meanwhile, is Airbus’ flagship long-haul aircraft and is widely deployed on intercontinental routes. Built largely from lightweight composite materials and powered by Rolls-Royce Trent XWB engines, the aircraft offers significantly improved fuel efficiency and longer range than older wide-body models, making it suitable for premium international services connecting China with Europe, North America and other long-haul destinations.

The latest order bolsters Airbus’ strong position in one of the world’s most important aviation markets.

Chinese airlines have increasingly relied on Airbus aircraft in recent years, with the European manufacturer benefiting from sustained demand as carriers rebuild fleets after the pandemic and expand capacity to accommodate rising passenger traffic. China is expected to remain one of the largest contributors to global aircraft demand over the next two decades, driven by growing middle-class incomes, increasing air travel, and the continued expansion of the country’s airport infrastructure.

The order also comes as Airbus continues expanding its industrial presence in China, including increased assembly capacity at its Tianjin final assembly line for the A320 family.

Boeing Receives Regulatory Boost

The announcement coincided with an important development for Airbus’ chief rival, Boeing. The U.S. Federal Aviation Administration said Friday that Boeing can once again issue airworthiness certificates for its 737 MAX and 787 Dreamliner aircraft, restoring a key responsibility that had been removed following a series of safety crises.

The authority was stripped after two fatal 737 MAX crashes in 2018 and 2019 that killed 346 people and led to the aircraft’s worldwide grounding. Boeing also faced renewed scrutiny after a door plug detached from a nearly new Alaska Airlines 737 MAX 9 during flight in January 2024, prompting another FAA investigation into the company’s manufacturing and quality-control processes.

Since last September, the FAA and Boeing have alternated responsibility for issuing airworthiness certificates for certain MAX and Dreamliner aircraft before delivery to customers.

“During the past eight months, the FAA has seen comparable production quality findings when Boeing issued airworthiness certificates and when the FAA issued them,” the regulator said.

“Based on these results, the FAA determined it can safely return this responsibility to Boeing.”

The decision represents an important vote of confidence from the U.S. regulator after years of heightened oversight and production restrictions aimed at improving Boeing’s manufacturing quality and safety standards.

Although Boeing has made progress in restoring regulatory confidence, Airbus continues to maintain significant momentum in commercial aircraft orders, particularly in Asia.

The A320neo family competes directly with Boeing’s 737 MAX, while the A350-900 rivals Boeing’s 787 Dreamliner and, on some long-haul routes, the larger 777X, which is still awaiting certification.

For Chinese airlines, fleet decisions reflect not only commercial considerations such as fuel efficiency, operating economics, and delivery availability, but also long-term capacity planning as international travel continues to recover and domestic demand remains robust.

Industry analysts note that aircraft availability has become a critical competitive factor, with both Airbus and Boeing carrying historically large order backlogs extending well into the next decade. Airlines are therefore securing delivery slots years in advance to ensure they can support future network expansion.

The Japanese yen could weaken beyond 170 against the U.S. dollar before eventually recovering as the government’s economic stimulus strategy begins to generate stronger growth and improve the country’s fiscal position, according to RSM US Chief Economist Joe Brusuelas.

Brusuelas said the yen’s prolonged weakness is not simply the result of short-term market speculation but the consequence of years of ultra-loose monetary policy, aggressive fiscal support and structural economic challenges that continue to constrain the Bank of Japan’s ability to tighten policy aggressively.

Speaking in Tokyo, Brusuelas said Prime Minister Sanae Takaichi’s administration is effectively prioritizing economic expansion and industrial competitiveness over a stronger currency in the near term, with policymakers viewing a weaker yen as a tool to boost exports and support long-term growth.

“I think what policymakers want is a yen that is supportive of external growth via the trade channel,” Brusuelas said.

This follows investors’ growing questions about whether Japanese authorities can prevent another sharp depreciation of the currency despite repeated warnings and previous market interventions. The dollar has climbed back above the psychologically important 160-yen level, erasing much of the impact of Japan’s record currency intervention earlier this year.

According to Brusuelas, the roots of the yen’s weakness stretch back several years, when Japanese authorities chose to flood financial markets with liquidity and rely heavily on the Bank of Japan to absorb government bond issuance rather than accept higher unemployment or weaker economic growth.

That policy mix has helped keep borrowing costs exceptionally low but has also widened the interest rate gap with the United States, encouraging investors to borrow cheaply in yen and invest in higher-yielding assets elsewhere, placing persistent downward pressure on Japan’s currency.

Brusuelas believes the yen’s eventual recovery depends largely on whether Takaichi’s economic programme succeeds in lifting productivity, expanding the tax base and reducing Japan’s enormous public debt burden. The government’s new economic blueprint shifts fiscal policy away from annual primary budget surplus targets toward improving the country’s debt-to-GDP ratio over time, reflecting its emphasis on sustained economic expansion rather than rapid fiscal consolidation.

If stronger growth translates into higher tax revenues and a gradual decline in the debt burden, investor confidence in Japan’s long-term fiscal outlook could improve, providing support for the yen.

Until then, however, Brusuelas expects policymakers to tolerate a weaker currency because it supports export competitiveness and corporate earnings. Although he sees the yen weakening toward 170 per dollar and potentially beyond before reversing course, Brusuelas said he considers the currency’s fair value to be around 157-158 per dollar.

That implies current exchange rates are already significantly weaker than economic fundamentals would justify.

The Ministry of Finance has previously demonstrated its willingness to intervene in currency markets, spending record amounts in April and May after the dollar breached the 160-yen threshold. However, the effect proved temporary, with the currency once again trading above that level.

Brusuelas believes authorities may have to intervene again if speculative trading becomes excessive.

“There’s going to have to be intervention to discipline excessive speculation,” he said.

Even so, he argued that intervention alone cannot reverse the yen’s broader trend because the underlying drivers remain intact. In his view, the Bank of Japan also faces severe limitations in how aggressively it can raise interest rates.

While higher rates would typically support a currency by attracting capital inflows, Brusuelas warned that Japan cannot tighten policy too quickly without undermining its broader economic objectives.

China’s slowing economy is pushing Beijing to rely more heavily on exports, intensifying competitive pressures across Asia. Against that backdrop, Brusuelas said raising Japanese interest rates much above 1.5% over the next six to nine months would risk weakening domestic investment and hurting the government’s growth strategy.

He said the central bank must therefore proceed cautiously when communicating future policy moves.

“They’re going to have to proceed cautiously here because you do not want what is a mild speculative attack to turn a wild global orgy of everybody shorting the yen all at once,” he said.

The statement backs growing market expectations that the BOJ will continue its gradual approach to monetary normalization even as inflation remains above its long-term target.

AI Investment Offers Long-Term Support

Brusuelas also pointed to artificial intelligence as one of the most promising pillars of Japan’s long-term economic strategy.

Prime Minister Takaichi has identified AI as a national priority, with the government seeking to strengthen Japan’s position in advanced semiconductor manufacturing and AI infrastructure.

Rather than competing directly with the United States in developing frontier AI models, Brusuelas said Japan is better positioned to benefit as a critical supplier within the global semiconductor ecosystem.

He expects Japanese companies to play an increasingly important role in supplying materials, manufacturing equipment and specialized technologies to industry leaders such as Nvidia, Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics.

Global spending on AI infrastructure is expected to reach roughly $5 trillion over the next four years, creating substantial opportunities for Japan’s industrial sector.

That investment cycle could eventually strengthen Japan’s economy, improve productivity, and support higher tax revenues, providing the foundation for a stronger yen over the longer term.

For now, however, Brusuelas believes that Japanese policymakers appear willing to accept continued currency weakness if it helps achieve those broader economic objectives, even if it means the yen temporarily falls to levels not seen in modern history.