Leading commercial airplane producer, The Boeing Co. (BA - Free Report) received a firm order of 25 airplanes from Avolon. The order includes 10’ 737 MAX 8s, 5’ 737 MAX 9s and 10’ Next-Generation 737-800s. The total value of the order at list prices is pegged at $2.4 billion.
The airline leasing company Avolon initially made a commitment to Boeing at the Farnborough Airshow in July about the 737 aircraft and this order is a finalization of that commitment. The Farnborough Air show was a happy hunting ground for Boeing as the company was able to secure a few multi-billion dollar order commitments for its 737 model.
The Boeing 737 MAX sees brisk demand in the single-aisle market for its fuel efficiency and low carbon dioxide emissions. Powered by the Commercial Fan Motor (“CFM”) International LEAP-1B engines, the Advanced Technology winglet of this airplane also enhances performance.
Additionally, the pivoting overhead stowage bins add to the spaciousness of the cabin. The bins give passengers more room to keep a carry-on roll-aboard near their own seat besides providing extra leg space. At the end, the 737 MAX 8 is expected to incur the least operating cost in the single-aisle category.
The 737 variant is one of the best selling aircraft models for Boeing and contributes a major chunk of the commercial airplane revenue of the company. Till September 20, 2012, the company received net orders for 692 airplanes of different variants of 737.
Boeing is a major operator in both the defense and commercial airspace market. We believe these multi-billion dollar commercial airline contracts will definitely act as a positive catalyst. The backlog at the end of the second quarter of 4,000 airplanes, valued at $302 billion, will definitely provide ample support to the company while boosting its overall performance, amidst the threat of cutback in the U.S. defense budget.
Chicago-based Boeing Co. retains a Zacks #3 Rank (Hold rating). Boeing’s peers, across diverse niches, are General Dynamics Corp. (GD - Free Report) , Lockheed Martin Corporation (LMT - Free Report) and Northrop Grumman Corporation (NOC - Free Report) .