Boeing (BA) Wins Order for 50 737 Max From Vietnam Airlines
The Boeing Company BA recently received a commitment from Vietnam Airlines to deliver 50 of its 737 MAX jets to expand the latter’s single-aisle fleet. This order will significantly boost Boeing’s revenue growth from its commercial aerospace business.
The 737 MAX caters to the single-aisle market with enhanced efficiency, improved environmental performance and increased passenger comfort. This aircraft’s fuel usage and carbon emissions are reduced by 20%, and it has a smaller noise footprint than other airplanes. The jets also offer increased comfort and relaxation for passengers, with modern technologies, greater space and larger pivoting overhead storage bins.
Such remarkable features must have bolstered demand for this jet family over the past few years. Since launch, 100 customers worldwide have placed orders for more than 5,600 737 MAX airplanes. Coming to the company’s latest achievements in this space, in September 2023, it finalized an order for 13 jets from Aviation Capital Group LLC and 25 jets from SMBC Aviation Capital.
Prospects in Asia-Pacific Aviation Market
As we continue to witness steady growth in air traffic over the past few months, the Asia Pacific region has emerged as a forerunner when it comes to regional dominance. Per a recent report by the International Transport Association, published in September 2023, Asia Pacific's airlines held the largest share of the global fleet at 33%. A 15% annual increase in new planes is projected to be witnessed in the region in 2023.
Boeing’s report estimates that by 2040, air travel within Asia Pacific markets will account for nearly half of global air traffic, driving 20-year demand for 17,645 new airplanes valued at $3.1 trillion. With its established presence in the Asia Pacific, further enhanced by the 190 737 Max order from Air India this June, along with the latest commitment from Vietnam Airlines, Boeing’s profitability should increase in the coming days. Boeing also has a deal with VietJet for the delivery of 200 of its 737 MAX planes.
Opportunities for Peers
A few other aerospace players that can gain from the expanding aviation market in the Asia Pacific region are Airbus SE EADSY, General Dynamics Corp. GD and RTX Corp. RTX.
Airbus’ one-third of the total order book comes from the Asia Pacific region. Currently, there are more than 4,000 Airbus aircraft in the fleets of more than 100 operators across the region. In June 2023, Airbus received a purchase agreement from Philippine Airlines for nine A350-1000 aircraft and another order from Air India for delivering 140 A320neo and 70 A321neo.
EADSY boasts a long-term earnings growth rate of 12.4%. The Zacks Consensus Estimate for 2023 sales indicates an improvement of 17.8% from that reported in 2022.
General Dynamics’ unit, Gulfstream Aerospace, has a vast portfolio of aircraft for every mission. In September 2023, the company made its debut at the Malaysian air show by showcasing its Gulfstream G280 and the Gulfstream G600. To further enhance the customer experience in Asia Pacific, it has added additional authorized warranty facilities to its network.
GD boasts a long-term earnings growth rate of 8.9%. The Zacks Consensus Estimate for 2023 sales indicates an improvement of 7.3% from that reported in 2022.
RTX Corporation’s unit, Collins Aerospace, has expanded its presence in the Asia-Pacific region. In June 2023, Japan Airlines announced that it will use Collins Aerospace's Ascentia maintenance performance monitoring solution on its Boeing 787 fleet.
RTX boasts a long-term earnings growth rate of 7.9%. The Zacks Consensus Estimate for 2023 sales indicates an improvement of 9.9% from that reported in 2022.
Price Performance
In the past year, shares of BA have rallied 43% against the industry’s 6.1% decline.
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Zacks Rank
Boeing currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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