Boeing Gets More 737 Jet Orders

Zacks

Aerospace giant The Boeing Company (BA) sealed an order for the delivery of 8 Next-Generation 737-800s and 7 737 MAX 8s to Thailand’s Nok Airlines Public Company (Nok Air).  Nok Air also plans to convert one of the 737-800s into a 737 Max.

The deal initially announced at the Singapore Air Show in Feb 2014 is priced at $1.45 billion. Both the 737 variants have been a huge success in the single-aisle jet market.

The 737-800 fleets belonging to the Next-Generation 737 family, comes with high performance efficiency and lower operating cost in its class while the 737 Max is equipped with cutting-edge CFM International LEAP-1B engines to deliver maximum efficiency, reliability and passenger comfort. The 737 Max boasts of an 8% operating cost per seat advantage over its peers.

The 737 Max has already surpassed the 2,000 order mark and currently stands at 2,017. Till date, Boeing has delivered 154 of the 737 models. The company commands a 40% share in the global airline market and an impressive order backlog of 5,100 airplanes valued at $374 billion speaks of the company’s solid position in the commercial airline sector.

Given the latest order backlog figures, the company can easily retain its current revenues for the coming five years without any fresh orders. Boeing’s constant technological innovation efforts are responsible for the high quality of aeroplanes that have kept the company’s sales book healthy.

The unprecedented rise in passenger traffic in the Asia-Pacific countries is bringing a steady flow of orders. Recently, Boeing received an order of $3.8 billion for supplying 50 737 jets to China’s Juneyao Airlines Co.

Going ahead, the projected 31% increase in airline traffic by 2017 as revealed by the International Air Transport Association (:IATA) could bring in favorable prospects for Boeing.  To capitalize on the growing market fundamentals, Boeing is launching more fuel-efficient versions like the 777X models that might help to gain more orders.  

Boeing’s targeted commercial deliveries for 2014 are projected to be between 715 and 725 airplanes and it has already supplied 217 models. Also, the company has secured a total order of 345 models, of which the 737 grabbed the majority share of 98.3%.

Currently, Boeing has a Zacks Rank#2 (Buy). Other better-placed industry operators include Embraer SA (ERJ), Spirit AeroSystems Holdings, Inc. (SPR) and CAE Inc. (CAE). All the above stocks carry the same rank as Boeing.

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