The Boeing Company (BA - Free Report) secured an order from Canada's WestJet Airlines yesterday for the supply of 65 new aircraft. The delivery of the planes is expected to commence in Sep 2017 with production anticipated to start in 2015. The order is for the company’s new line of 737 aircraft and is worth $6.3 billion at current list prices.
Boeing will sell 40 737 MAX 8s and 25 737 MAX 7s. The line of 737 MAX is designed to suit all the requirements of an advanced passenger carrier including efficiency, reliability and passenger amenities. The final purchase deal is set to be concluded by Sep 2013.
The MAX 8 has the capacity to carry 162 to 175 passengers, while the MAX 7 has room for 126 to 140 passengers. The narrow body 737 MAX is expected to rival Airbus’ A320neo carriers. The latest incarnation of Boeing's 737 MAX is powered by CFM International LEAP-1B engines which offer fuel cost savings of 13% from previous models.
WestJet has also revised its existing order of 15 Next-Generation 737 aircraft to 737 MAX aircraft due between Dec 2014 and 2018. The current addition will bring Boeing’s total deliveries to WestJet to 92.
Deliveries of Boeing’s 737 will ramp up in 2013 backed by rising airline activities in Asia, particularly in the Middle East. The company picked up sizeable international contracts from the Paris Air Show this year. The most notable contract in Paris came from Ryanair Holdings plc (RYAAY - Free Report) for the supply of 175 next generation 737-800 airplanes for $15.6 billion.
Boeing’s technologically advanced commercial aircraft is in demand in the domestic as well as international markets. This will ensure a stable future earnings stream for Boeing’s Commercial Airplane Division. Commercial aircraft production for top manufacturers is forecast to range between 27,350 and 34,000 in the next 20 years, which is a good sign for the company.
However, Boeing’s defense opportunities might be hurt by budget sequestration in the U.S. Currently, Boeing carries a Zacks Rank #3 (Hold).
Meanwhile Zacks Ranked #2 (Buy) defense players looking good at the moment are Raytheon Company (RTN - Free Report) and Northrop Grumman Corp. (NOC - Free Report) .