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The Boeing Co. (BA - Analyst Report) has secured a commitment for 50 of its 737 aircraft from China’s newest low-cost airline – 9 Air. A surge in the middle class population and growing demand for cheap flying options have made low-cost travel a hot business in this region.

9 Air, an affiliate of Juneyao Airlines Co., has plans to introduce the next-generation models of the 737 and 737 Max to its all-Boeing fleet. This new low-cost carrier plans to start domestic services in China in order to meet growing air traffic demand in the region.

As per Boeing’s list prices, its 737 aircraft generally sells for $76 million to $109.9 million. On the basis of these prices, the latest order may come in a price band of $3.8 billion and $5.5 billion. We expect 9 Air to get a discount on list prices as is the custom with Boeing on bulk orders.

Low cost carriers, with their ability to stimulate traffic with low fares, are growing faster than the market as a whole. There is also a strong demand to replace older, less fuel-efficient airplanes. The market for new airplanes is set to become more geographically balanced in the next two decades. Asia-Pacific, including China, will however continue to lead the way in total airplane deliveries.

Earlier, Boeing had already revealed that Asia-Pacific will require 12,820 airplanes worth $1.9 trillion in the next two decades. The deliveries will account for a sizeable 36% of the global commercial airplane delivery in the aforesaid period. These deliveries will triple the size of the Asia-Pacific aircraft fleet by 2032 from 2012 levels.

Not surprisingly, Boeing is likely to be a major beneficiary of this demand explosion, as nearly 69% of the new additions will be in the single-aisle market. The emphasis being on swift, low-cost travel, Boeing with its fuel efficient single-aisle airplanes like the Next-Gen 737 and the 737 MAX will definitely secure a good many of these potential orders.

Given its impressive track record of both innovation and fuel efficiency, we expect Boeing to come out with newer variants of single-aisle aircraft, always a step ahead of its competitors.

With a backlog of orders worth $441 billion as of 2013, Boeing has been ramping up its production of big commercial aircraft. In a separate release, Boeing announced that Italian carrier Neos will become an operator of the Boeing 787. The airline has agreed to lease two Boeing 787-8 Dreamliners from International Lease Finance Corporation (ILFC). Based at Milan Malpensa Airport, in northern Italy, Neos will be Italy’s first Boeing 787 operator when it takes delivery of the two leased 787-8s from ILFC in 2018. ILFC is the largest customer for the Boeing 787. It has 74 of these planes on order.

Boeing currently holds a Zacks Rank #2 (Buy). Other well-placed stocks in the industry include Embraer SA (ERJ - Analyst Report), Alliant Techsystems Inc. (ATK - Analyst Report) and CAE Inc. (CAE - Snapshot Report), all with a comparable Zacks Rank #2 (Buy).

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