According to a Reuters report, Myanma Airways, the state-owned national airline of Myanmar, is slated to lease about 12 of The Boeing Company’s (BA - Free Report) 737 jets to expand its domestic operations. The aircraft will be leased by diversified conglomerate General Electric Company’s (GE - Free Report) aviation leasing arm GECAS (GE Capital Aviation Services).
Although Boeing and Myanma Airways both refused to comment on the proceedings, the deal is likely to offer the airline company the flexibility and the requisite resource to operate internationally as Myanmar opens up to business and tourism sectors. In addition, Myanma Airways will also save on operating costs by taking the jets on lease and paying only a nominal monthly fee, against an outright purchase of $90 million for each of the 737 aircraft.
Air traffic is expected to increase significantly in Myanmar as new airlines start their ventures and foreign carriers open up shops. However, a dearth of adequate infrastructure facilities and poor safety record remain perennial concerns for the industry. Incidentally, Myanma Airways had to ground three Chinese-made Xian MA60s in 2012 after two aircraft suffered accidents while landing. This maybe a reason why the airline company is now banking on Boeing jets taken on lease to strengthen its position in the market.
GE Aviation is a leading supplier of commercial and military jet engines and components. It also provides avionics, electric power, and mechanical systems for aircraft along with an extensive global service network to support these products.
General Electric, the parent company, is one of the most diversified technologies and financial service corporations in the world. The company’s segments include Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting, and GE Capital.
General Electric currently has a Zacks Rank #3 (Hold). Companies in the industry that warrant a look include 3M Company (MMM - Free Report) and Hutchison Whampoa Limited , both of which carry a Zacks Rank #2 (Buy).