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Boeing & Jet Airways Ink Deal Worth Over $9B for 75 737 Max

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Per major media releases, The Boeing Company (BA - Free Report) has recently entered into an agreement with the second largest Indian airline, Jet Airways, for delivering 75 of its 737 MAX narrow body jet aircraft. The agreement is in line with Jet Airways’ latest rush to expand their carriers to meet the expanding domestic passenger demand in the country.

The deal, valued more than $9 billion at current list prices, led to the third consecutive agreement between Boeing and Jet Airways over the last ten months, taking the total purchased tally to 225 aircraft. However, it’s yet to be revealed whether the agreement was a formal order or a non-binding memorandum of understanding.

Boeing’s Prospects in India

Due to the rising level of airborne passenger and cargo traffic, major airlines from all over the world, including India-based airlines are increasing their fleet size to meet rigorous customer demands. According to the International Air Transport Association, the domestic Indian passenger traffic witnessed a 27.9% rise in March 2018 from the previous year. Naturally, this must have prompted Indian airlines, in particular, to aggressively expand their fleet size and the latest deal between Boeing and Jet Airways is a glowing example of that.

In fact, lately, Boeing has inked a number of significant deals with its Indian customers to support the growing aviation market in the nation. In this line, Boeing has recently entered into a $3.3 billion agreement, at list prices, with Vistara for delivering six of its 787 dreamliners to the company. SpiceJet also placed a firm order for 40 Boeing 737 MAX aircraft in June, a deal valued at a list price of $4.74 billion, the first of which is likely to be delivered later this year. Such impressive orders for its commercial airplanes in India will pave a solid foundation for the company to capture a sizeable market share in the country.

In light of these developments, it is imperative to mention that India has emerged as another promising market for Boeing, with the Asia’s third largest economy, which is expected to become the world’s fastest growing aviation market. According to the company, the country will need 2,100 new planes worth $290 billion in the next 20 years, up 13.5% from the year-ago estimate of 1,850 planes. Therefore, we may expect to witness more such deals in coming days between Indian airlines and Boeing, which is the largest jet maker in the world.

Price Movement

Boeing’s stock rallied about 66.6% in a year compared with the industry’s growth of 29.5%. The outperformance was primarily led by the robust worldwide demand for its commercial aircraft and military jets.


Zacks Rank & Key Picks

Boeing currently carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the same space are Northrop Grumman (NOC - Free Report) , Textron (TXT - Free Report) and Wesco Aircraft Holdings (WAIR - Free Report) .

While Northrop Grumman sports a Zacks Rank #1 (Strong Buy), Textron and Wesco Aircraft Holdings carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northrop Grumman delivered an average positive earnings surprise of 13.87% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 6.24% to $16.50 in the last 90 days.

Textron came up with an average positive earnings surprise of 16.64% in the last four quarters. The Zacks Consensus Estimate for 2018 earnings has risen by 2.94% to $3.15 in the last 90 days.

Wesco Aircraft Holdings’ long-term growth rate is pegged at 12%. The Zacks Consensus Estimate for 2018 earnings has risen by 10% to 77 cents in the last 90 days.

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