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Analyst Blog

The Boeing Company (BA - Analyst Report) received cumulative new orders for 27 commercial airplanes, worth $4 billion at current list prices. The new bookings will bring in a sigh of relief for this commercial airplane manufacturer, as its technologically sound 787 model is still grounded due to battery problems.

The orders include 17 airplanes of the 737 model.  United Continental Holdings Inc. (UAL - Analyst Report) ordered eight 737-900ERs, Qantas ordered five aircrafts and leasing company GECAS ordered for another four airplanes. On the other hand, 10 big 777 airplanes have been ordered by Air Lease Corp. (AL - Snapshot Report). However, orders for two 737 airplanes was cancelled by an airline operator.

The 737 has a list price of $82 million to $107 million while 777 list prices range from $259 million to $315 million. We expect the airline operators to get a discount on the list prices as Boeing has historically offered discounts on bulk orders.

Boeing’s commercial airplane revenue target for 2013 is in the range of $51 billion to $53 billion. The steady stream of orders received by the company so far in 2013 suggests that it is on the right track to meet its goals. Year to date, the company has received net orders for 191 airplanes, with the 737 model dominating the order book with 138 airplanes.

Recently, Boeing was able to secure a billion dollar order from Cathay Pacific Airways for three 747-8 Freighter airplanes. The order also includes options for five additional 777 Freighters.

The gradual recovery in the global economy is bringing in a steady improvement in passenger and freight traffic. As per the International Air Transport Association (IATA) global airline passengers will touch 3.6 billion in 2016, expanding 5.3% per annum in the period 2012 to 2016.

We believe the airline operators will have to increase and/or upgrade their fleet to cope with the projected increase in passenger traffic. Boeing with its wide repertoire of airplane models will stand to benefit from rising customer demand for commercial airplanes.

Apart from the commercial airspace, Boeing is also one of the leading players in the U.S. Aerospace and Defense sector. Boeing and its aerospace peer Lockheed Martin Corporation (LMT - Analyst Report) currently retain a Zacks Rank # 2 (Buy).