Aerospace behemoth The Boeing Company (BA - Free Report) has reported third-quarter 2016 deliveries, wherein commercial deliveries dropped 5.5% but defense shipments were up 4.2% year over year.
Boeing’s third-quarter 2016 commercial deliveries of 188 airplanes were down due to lower demand for the 737, 777 and 787 Dreamliners. Sequentially, deliveries reflected a 5.5% decline. Deliveries of the single-aisle 737 slipped to 120 in the third quarter from 126 a year ago, as the company was busy with the production of a newer version of its most popular plane, the 737 MAX.
Shipments of 777 and 787 Dreamliners were 22 and 36, compared with 27 and 37 in the year-ago period, respectively. For the 747 and 767 jets, the company’s deliveries clocked 5 each, compared with 4 units of 747 and 5 units of 767 in the year-ago quarter.
In the defense and space business, Boeing’s deliveries totaled 50 in the third quarter of 2016, up from 48 a year ago and 45 in the preceding quarter. Total deliveries consisted of 19 AH-64 Apache helicopters (both new and remanufactured) and 14 Chinook helicopters (new and renewed). The company also delivered 6 F/A-18 jets, 4 P-8 models, 4 F-15s, 1 Military Satellite, and 2 Commercial and Civil Satellites.
Boeing’s total deliveries were 238 units in the third quarter 2016, compared with 247 a year ago.
In the first nine months of the year, Boeing’s total shipments were 708 units, compared with 726 in the corresponding period last year. Of the total, commercial deliveries were 563 (down from 580 in the year-ago period), while defense deliveries were 145 units (down from 146 a year ago).
Is Boeing Losing Contracts?
The first nine months’ results show that Boeing’s delivery numbers have declined on a year-over-year basis.
Last month, Dennis Muilenburg, Boeing’s Chief Executive, stated that the company might miss its target of selling 740 jetliners in 2016 and the latest production target of 777 jets may see another cut if sales continue to lag.
During the release of first-quarter delivery numbers, Muilenburg had revealed that the company is losing out on important contracts related to aircraft and satellites to overseas rivals due to a stand-off in Congress over the future of U.S Export-Import (Ex-Im) Bank. This has restricted the export credit agency’s financing capabilities.
In the past, Boeing had benefited immensely from the support of Ex-Im Bank. After supporting U.S. exports through nearly eight decades, the credit agency’s charter finally ended in Jun 2015. The closure of Ex-Im Bank is undoubtedly a big setback for Boeing as a substantial portion of its foreign orders was guaranteed by the bank.
Presently, three out of five seats in Ex-Im Bank’s board are vacant. This means that transactions worth over $10 million or deals with a term of over a year cannot be approved. The board fell short of a quorum, leaving the bank closed to aircraft deals since last July. A reauthorization in last December, following a long bipartisan political war, has not helped matters either.
Q3 Order Details
Looking at the third-quarter order details at Boeing, the company has received 150 commercial orders, compared to the year-ago figure of 182.
For 2016, Boeing had earlier guided slightly lower deliveries due to a lower production rate of the 747 program and the transition to the 737 MAX.
Nevertheless, the defense and aerospace major is focused on nabbing major contracts and maintaining a strong order inflow. Still we need to keep a close eye on whether orders are climbing from the fourth quarter.
The company is slated to release third-quarter 2016 results on Oct 26.
Peers’ Delivery Numbers
In September, Airbus Group SE (EADSY - Free Report) delivered 62 aircraft, including 8 A320neos and 5 A350s. In the first nine months of the year, total deliveries of the company clocked 462 aircraft.
Embraer SA (ERJ - Free Report) and Bombardier Inc. are yet to announce their delivery numbers.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>