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Boeing (BA) Wins Order for 205 737 MAX 8 Jets from SpiceJet
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Leading commercial aircraft maker The Boeing Company (BA - Free Report) has received a commitment for up to 205 airplanes from SpiceJet, an India-based low-cost airline. SpiceJet placed the order with the intention of expanding its domestic and international operations.
Details of the Deal
Value of the airplanes at current list prices comes to nearly $22 billion. However, it goes without saying that the SpiceJet will enjoy a substantial discount on this amount. The list price of each 737 MAX 8 is about $110 million. Although we expect a discount of approximately 40% on the price as it is, an even higher discount wouldn’t be surprising.
The deal covers 100 new 737 Max 8s, 42 Max jets and an additional 13 737 Max jets. In Dec 2016, Boeing's orders & deliveries website had attributed the order and purchase rights for 50 additional airplanes to an unidentified customer.
This means that bookings for 155 planes had already been made and the remaining 50 planes stand as a commitment from SpiceJet, if the airline later decides to buy more planes.
SpiceJet currently has an all-Boeing fleet comprising nearly 32 Next-Generation 737s. The new order is expected to enable the airline to increase its competitive edge and grow profitably.
Notably, Boeing’s 737 MAX family of commercial aircraft incorporates the latest-technology CFM International LEAP-1B engines to deliver the highest efficiency, reliability and passenger comfort in the single-aisle market.
Recent Orders
Boeing saw a string of order wins from a number of airlines since the start of 2017. On Jan 4, the company received an order for the 737 MAX 8 from GE Capital Aviation Services, the commercial aircraft leasing and financing arm of General Electric (GE - Free Report) . The deal is valued at nearly $8.25 billion. (Read more: Boeing to Supply 75 737 MAX 8 Jets to GE Capital Aviationn)
Again, on Jan 10, Boeing has received an order for three Next-Generation 737-800 airplanes from South Korea-based Jeju Air, Korea's first low-cost carrier. The value of the airplanes is nearly $300 million. (Read more: Boeing Wins Order for Next-Gen 737-800 Jets from Jeju Air)
Single-Aisle Aircraft in Demand
Over the next 20 years, Boeing envisions demand for over 39,620 airplanes, valued at more than $5.9 trillion. About 38% of the total commercial demand is likely to come from the Asian markets. Single-aisle airplanes will comprise nearly 70.6% of the new deliveries, with airlines requiring over 28,140 jets of this category.
India, in particular, appears to be a promising market for Boeing. According to the company, the country will need 1,850 new planes, worth $265 billion, in the next two decades, up 6% from the year-ago estimate.
Boeing expects single-aisle jets to be the major driver of demand growth, comprising 71% of the total projection. While the new 737 MAX 8 and 737-800 will likely grab a lion’s share of the new orders, Airbus Group SE’s (EADSY - Free Report) A320neo is expected to pose a significant competitive challenge.
Boeing’s 737 is one of the best-selling planes in the single-aisle market, thanks primarily to its fuel efficiency and passenger comfort. To maintain its dominance in the commercial aerospace market, the company continues to invest in research and development to upgrade and churn out upgraded versions of its existing planes.
2016 Order Details
Boeing’s 2016 order details show that the company has booked 668 net commercial orders (accounting for cancellations), valued at $94.0 billion at current list prices. The figure includes 550 orders for the 737, followed by 58 for the 787. On the other hand, Airbus registered net bookings of 731 aircraft, beating Boeing. (Read more: Airbus 2016 Orders Beat Boeing's Again, Backlog Strong)
Since Boeing and Airbus are the two largest players in the commercial aircraft space and therefore direct rivals, competition in the industry is intensifying. At the end of 2016, total commercial airline industry backlog stood at 12,589 aircraft, out of which Airbus’ share was 55% or 6,874 aircraft, while Boeing has a 45% share or 5,715 aircraft.
Price Movement
Shares of Boeing have gained 26.4% over the last 12 months, outperforming the Zacks categorized Aerospace–Defense industry’s gain of 21.6%. This could be because the company’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.
Lockheed’s earnings beat estimates by 26.2% in the last reported quarter. The Zacks Consensus Estimate for 2017 moved up by 1.2% in the last 60 days to $12.63.
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Boeing (BA) Wins Order for 205 737 MAX 8 Jets from SpiceJet
Leading commercial aircraft maker The Boeing Company (BA - Free Report) has received a commitment for up to 205 airplanes from SpiceJet, an India-based low-cost airline. SpiceJet placed the order with the intention of expanding its domestic and international operations.
Details of the Deal
Value of the airplanes at current list prices comes to nearly $22 billion. However, it goes without saying that the SpiceJet will enjoy a substantial discount on this amount. The list price of each 737 MAX 8 is about $110 million. Although we expect a discount of approximately 40% on the price as it is, an even higher discount wouldn’t be surprising.
The deal covers 100 new 737 Max 8s, 42 Max jets and an additional 13 737 Max jets. In Dec 2016, Boeing's orders & deliveries website had attributed the order and purchase rights for 50 additional airplanes to an unidentified customer.
This means that bookings for 155 planes had already been made and the remaining 50 planes stand as a commitment from SpiceJet, if the airline later decides to buy more planes.
SpiceJet currently has an all-Boeing fleet comprising nearly 32 Next-Generation 737s. The new order is expected to enable the airline to increase its competitive edge and grow profitably.
Notably, Boeing’s 737 MAX family of commercial aircraft incorporates the latest-technology CFM International LEAP-1B engines to deliver the highest efficiency, reliability and passenger comfort in the single-aisle market.
Recent Orders
Boeing saw a string of order wins from a number of airlines since the start of 2017. On Jan 4, the company received an order for the 737 MAX 8 from GE Capital Aviation Services, the commercial aircraft leasing and financing arm of General Electric (GE - Free Report) . The deal is valued at nearly $8.25 billion. (Read more: Boeing to Supply 75 737 MAX 8 Jets to GE Capital Aviationn)
Again, on Jan 10, Boeing has received an order for three Next-Generation 737-800 airplanes from South Korea-based Jeju Air, Korea's first low-cost carrier. The value of the airplanes is nearly $300 million. (Read more: Boeing Wins Order for Next-Gen 737-800 Jets from Jeju Air)
Single-Aisle Aircraft in Demand
Over the next 20 years, Boeing envisions demand for over 39,620 airplanes, valued at more than $5.9 trillion. About 38% of the total commercial demand is likely to come from the Asian markets. Single-aisle airplanes will comprise nearly 70.6% of the new deliveries, with airlines requiring over 28,140 jets of this category.
India, in particular, appears to be a promising market for Boeing. According to the company, the country will need 1,850 new planes, worth $265 billion, in the next two decades, up 6% from the year-ago estimate.
Boeing expects single-aisle jets to be the major driver of demand growth, comprising 71% of the total projection. While the new 737 MAX 8 and 737-800 will likely grab a lion’s share of the new orders, Airbus Group SE’s (EADSY - Free Report) A320neo is expected to pose a significant competitive challenge.
Boeing’s 737 is one of the best-selling planes in the single-aisle market, thanks primarily to its fuel efficiency and passenger comfort. To maintain its dominance in the commercial aerospace market, the company continues to invest in research and development to upgrade and churn out upgraded versions of its existing planes.
2016 Order Details
Boeing’s 2016 order details show that the company has booked 668 net commercial orders (accounting for cancellations), valued at $94.0 billion at current list prices. The figure includes 550 orders for the 737, followed by 58 for the 787. On the other hand, Airbus registered net bookings of 731 aircraft, beating Boeing. (Read more: Airbus 2016 Orders Beat Boeing's Again, Backlog Strong)
Since Boeing and Airbus are the two largest players in the commercial aircraft space and therefore direct rivals, competition in the industry is intensifying. At the end of 2016, total commercial airline industry backlog stood at 12,589 aircraft, out of which Airbus’ share was 55% or 6,874 aircraft, while Boeing has a 45% share or 5,715 aircraft.
Price Movement
Shares of Boeing have gained 26.4% over the last 12 months, outperforming the Zacks categorized Aerospace–Defense industry’s gain of 21.6%. This could be because the company’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.
Zacks Rank & a Key Pick
Boeing currently carries a Zacks Rank #3 (Hold). A better-ranked stocks in the same space include Lockheed Martin Corporation (LMT - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lockheed’s earnings beat estimates by 26.2% in the last reported quarter. The Zacks Consensus Estimate for 2017 moved up by 1.2% in the last 60 days to $12.63.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>