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Boeing (BA) Inks Deal to Supply 20 737 Max Airplanes to Arajet

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The Boeing Company (BA - Free Report) recently unveiled that it clinched a supply agreement for 20 737 Max jets from Arajet, a new airline in the Caribbean. The agreement also has the provision for delivering 15 additional 737 MAX jets going forward. This highlights the growing importance and demand for the 737 Max jet as the commercial aircraft market emerges from the impacts of COVID-19.

Boeing’s Growth Prospects

Boeing, a leader in manufacturing aircraft, has been witnessing a ramp-up in demand for its commercial aircraft as restrictions ease on domestic and international travel worldwide.

In this context, it is imperative to mention that the 737 Max family of aircraft remains the largest contributor to Boeing’s commercial business performance since its return to operations following the Federal Aviation Administration’s approval to fly again in November 2020. BA witnessed solid 68% year-over-year growth in its commercial jet deliveries in the last reported quarter, primarily due to higher 737 jet deliveries.

The 737 MAX family is designed to offer the greatest flexibility, reliability and efficiency in the single-aisle market. Moreover, it excels in providing savings on fuel, maintenance and operations costs to operators, thereby enabling them to provide affordable travel options to customers.

Such enhanced features have been consistently propelling demand for the 737 Max family. Additionally, as the commercial aircraft market continues to gain momentum, this may further augment an inflow of orders involving the 737 Max jets for the aerospace giant, like the latest one. This, in turn, will increase the revenue growth prospects of Boeing over the long haul.

Per the report from Mordor Intelligence, the commercial aircraft market is poised to witness a CAGR of 5% during the 2022-2027 period. Such upbeat growth prospects exemplify immense growth opportunities for aerospace majors like Boeing.

Opportunities for Peers

Such abounding growth projections stand to benefit not only Boeing but also aerospace majors, namely Airbus SE (EADSY - Free Report) , Embraer SA (ERJ - Free Report) and Textron (TXT - Free Report) .

The Airbus SE family of commercial aircraft comprises the A220 Family, A320 family, A330 family, A350 family and A380.

The Zacks Consensus Estimate for Airbus’ 2022 earnings has been revised upward by 2.7%. The Zacks Consensus Estimate for EADSY’s 2022 sales implies a growth rate of 9.7% from the prior-year reported figure.

Embraer is one of the largest commercial aircraft companies in the world. Embraer’s family of jets consists of the family of E-JETS E2, E-JETS and ERJs.

Embraer boasts a long-term earnings growth rate of 17%. The Zacks Consensus Estimate for ERJ’s 2022 earnings suggests a growth rate of a solid 360% from the prior-year reported figure. Embraer shares have returned 3.4% in the past year.

Textron’s business jets, namely Cessna Citation M2 Gen2 and Cessna Citation XLS Gen2, were recently announced at the National Business Aviation Association - Business Aviation Convention & Exhibition. Textron expects the delivery of these jets to begin by the end of the first and second quarters of 2022.

Textron boasts a long-term earnings growth rate of 11.8%. The Zacks Consensus Estimate for TXT’s 2022 earnings suggests a growth rate of 16.4% from the prior-year reported figure. Shares of Textron have returned 29.6% in the past year.

Price Performance

Shares of Boeing have plunged 31.2% in the past year compared with the industry’s decline of 34.9%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank

Boeing currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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