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Boeing (BA) Wins Order for 45 787 Jets From Thai Airways

The Boeing Company BA recently clinched an order from Thai Airways to supply 45 of its 787-9 Dreamliner jets to boost this Southeast Asian airline’s widebody fleet. This should bolster Boeing’s commercial delivery figures.

Importance of 787 Dreamliner

The Boeing 787 Dreamliner family has unparalleled fuel efficiency and range flexibility. It uses 25% less fuel and creates 25% fewer emissions than the airplanes they replace. The jet offers passengers a matchless experience with comfort, a spacious cabin, adjustable LED lighting, the largest windows and improved air quality. The 787-9 model, 20 feet longer than the 787-8, can fly 300 passengers, 7,565 nautical miles (14,010km), with 25% better fuel per seat than the airplanes it will replace.

Such remarkable features must have bolstered the demand for this jet family, translating into solid order growth for this aircraft. Evidently, since 2011, the 787 family has launched more than 390 new nonstop routes around the world. Currently, the company has 797 unfulfilled orders for 787 Dreamliner airplanes across the world. Revenues earned from the delivery of these jets, including the latest deal for 45 aircraft, should significantly boost Boeing’s commercial unit’s top line, which witnessed a solid 30% rise in 2023 from 2022.

Prospects in the Southeast Asian Market

As we continue to witness the recovery of air traffic over the past few months, the Southeast Asian region has also been witnessing a solid growth pattern.

To this end, Boeing's Commercial Market Outlook (CMO) forecasts that the airplane fleet in Southeast Asia will grow 5% by 2040, resulting in the demand for more than 4400 new airplanes valued at $700 billion. Undoubtedly, such solid market growth prospects offer strong expansion opportunities for Boeing, one of the largest commercial jet makers in the world.

Boeing already enjoys a strong business footprint in this part of the world with its solid presence in nations like Singapore, Indonesia, Vietnam, Malaysia, Thailand, Brunei and the Philippines. During 2023, around 13% of Boeing’s revenues came from the Asian region. On Feb 20, 2024, Boeing received an order from Royal Brunei Airlines for four 787 Dreamliners. Such developments should increase the company’s profitability in the Southeast Asian aviation market in the coming days.

Peer Prospects

A couple of other aerospace players that can gain from the expanding aviation market in the Southeast Asian region are Airbus SE EADSY, General Dynamics GD and Textron TXT.

Airbus has a long-standing presence in Indonesia, Malaysia, Singapore, Vietnam, Philippines and Thailand. During 2023, the Asia-Pacific region accounted for 32% of Airbus’ commercial aircraft deliveries. Thai Airways International is among the longest standing customers of Airbus.

EADSY boasts a long-term (three to five years) earnings growth rate of 12.4%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 10.8% from that reported in 2023.

General Dynamics’ unit, Gulfstream Aerospace, has a solid presence worldwide. Coming to the Southeast Asian region, the company announced on Feb 8, 2024, that its all-new ultra large-cabin Gulfstream G700 will make its Singapore Airshow debut. Previously, in September 2023, the G280 and G600 had been showcased at the Malaysian air show.

GD boasts a long-term earnings growth rate of 10.8%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 8.9% from that reported in 2023.

Textron’s unit, Textron Aviation, offers a wide range of commercial aircraft solutions. The Asia Pacific region is home to nearly 400 Textron Aviation jets and more than 1,000 Textron Aviation turboprops. In February 2024, Textron Aviation delivered the new Cessna Grand Caravan EX Amphibian turboprop in Malaysia. During the Singapore Airshow, the company will showcase the Beechcraft King Air 360, the Cessna Grand Caravan EX, the Citation Latitude, the Citation CJ4 Gen2 and the Citation M2 Gen2.

TXT boasts a long-term earnings growth rate of 11.7%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 7% from that reported in 2023.

Price Performance

In the past year, shares of BA have gained 0.2% against the industry’s 8.7% decline.

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Zacks Rank

Boeing currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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