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Boeing Gets Twin 747-8 Orders

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The Boeing Company (BA - Free Report) has received an order from Silk Way Airlines of Azerbaijan for two of its 747-8 Freighters airplanes. The Baku-based cargo carrier Silk Way’s order is worth $704 million at list prices.

The wide-body jet airliner – Boeing 747-8 – is the fourth-generation Boeing 747 version, with lengthened fuselage, redesigned wings, and improved efficiency. The jet airliner has two main variants – the 747-8 Intercontinental (747-8I) for passengers and the 747-8 Freighter (747-8F) for cargo.

The 747-8 Freighter gives customers 16% more revenue cargo volume in comparison to its predecessor 747-400 Freighter and offers comparable trip costs and lower ton-mile costs. The Freighter benefits cargo operators with lowest operating costs and best economics among large freighter airplanes. It is also environmentally friendly with lesser harmful emissions. After 150,000 hours of service, the 747-8 Freighters have reported a 1% improvement in fuel burn than expected by customers.

In Mar 2013, Boeing also received an order worth $1 billion from Cathay Pacific Airways for three 747-8 Freighter airplanes. The order also includes options for five additional 777 Freighters. With this order from Cathay Pacific and the cancellation of a five-plane order by Gulf-based DAE Capital, the 747-8 Freighter’s order book for the year was at minus two previously. So far, Boeing has delivered 36 747-8 freighters to customers worldwide.

Previously, the company also expressed its willingness to slowdown the production level of this jumbo freighter airplane from two to 1.75 a month. However, the officials remain confident about the airplane’s future growth.

Boeing is the largest aircraft manufacturer in the world in terms of revenue, orders and deliveries, and one of the largest aerospace and defense contractors. During the first half of the year, Boeing delivered 306 jetliners, 6.6% more than the year-ago level. Boeing’s second quarter delivery level increased 12.7% on an annualized basis with deliveries of 169 airplanes, marking a 15-year high. The production level was boosted in order to keep pace with the increasing demand for new aircraft.

The company expects its commercial airplanes deliveries between 635 and 645 in 2013. This includes more than 60 units of 787 airplanes. Commercial airplanes' 2013 revenue is expected in the band of $51 billion to $53 billion with operating margin of approximately 9.5%.

Boeing presently retains a short-term Zacks Rank #2 (Buy). There are other companies in the sector that also appear promising and are worth accumulating now. These are Zacks Ranked #2 (Buy) Embraer S.A. (ERJ - Free Report) , Northrop Grumman Corp. (NOC - Free Report) and Alliant Techsystems Inc. .

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