Boeing (BA) Gets Orders for 24 737 MAX Jets From 777 Partners
The Boeing Company BA recently received a purchase deal from private investment firm 777 Partners, wherein the company will add 24 737-8s to the latter’s aviation portfolio, with purchase rights for an additional 60 airplanes. At list prices, the transaction amount for 24 737-8 jets would be about $2.9 billion, although there remains a huge scope for discounts. Boeing’s shares gained 6.8% to close at $269.19 on Mar 12, post the announcement of this deal.
Significance of the Deal
At a time when the entire aerospace industry is witnessing extreme downturns, and Boeing in particular witnessed around 460 order cancellations for the 737 MAX jets in 2020, this deal could be of massive significance for the company’s ailing commercial business. More so, the new deal will likely boost Boeing’s confidence in approaching other buyers for the 737 MAX jets. Moreover, as aircraft buyers anticipate a market recovery going ahead, this deal may encourage other aircraft leasing companies to place orders for the 737 MAX jets.
What’s Favoring Boeing Of Late?
Ever since the grounding of Boeing's 737 MAX aircraft, the company made a series of upgrades to the plane and inducted several pilot training protocols, which finally enabled them to receive an approval from the Federal Aviation Administration in November 2020, certifying the 737 MAX safe for flying.
The approval had an instant positive impact on the company as it clinched orders for 75 additional 737 MAX airplanes in December from Europe's largest airline — Ryanair. Also, during the same month, Alaska Airlines ALK agreed to buy 23 737 MAX 9 jets. Recently, in March, per a CNBC report, the United Airlines UAL announced that it is buying 25 additional 737 Max planes and taking delivery of other orders earlier than previously planned from Boeing as well.
But the big news appeared earlier this month. Per major media sources, Boeing is reportedly close to clinching a multibillion-dollar deal from Southwest Airlines LUV for a potential order of 130 737 MAX 7 aircraft, alongside significant options for 170 more 737 aircraft.
Interestingly, Boeing recently revealed that in February the aerospace giant registered more new orders for commercial planes than cancellations, for the first time in the past 15 months. It received 82 new orders while orders for 51 got cancelled.
Over the past couple of months, Boeing has received firm orders for its commercial jets and also expects to grab major deals in the near future. This will provide a solid blow to Airbus SE, considering Boeing has been falling behind its arch rival for over past couple of years, following 737 jets’ grounding in March 2019.
Price Performance & Zacks Rank
Shares of the Zacks Rank #4 (Sell) company have gained 107.7% in the past year compared with the industry’s growth of 43.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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