The Boeing Company
) projects that China will need 5,260 new commercial airplanes,
valued at $670 billion, over the next 20 years. Boeing is bullish
over the Chinese market since it expects 75% of the new demand will
be for growth instead of replacement. The Chinese market will
benefit from sustained strong economic growth, growing trade
activities and increasing personal wealth.
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Boeing predicts that small and intermediate twin-aisles, such as
the Boeing 787 Dreamliner and 777, will account for a significant
part of future deliveries. These airplanes are expected to be the
highest value segment, making up 48% of the market in value with
some 1,190 new deliveries anticipated. The expansion of the Chinese
market has also unleashed pent-up demand for broader international
Boeing expects Chinese carriers to experience rapid international
expansion over the next 20 years, with an annual increase rate of
8.9% on average. Tourism in China will also help fuel a strong
demand for single-aisle aircraft, with total deliveries of
single-aisle airplanes reaching 3,650 through 2031. Also, the new
737 MAX family will allow Boeing to continue to deliver the most
fuel-efficient, capable airplane with the lowest operating costs in
the single-aisle market.
Worldwide, Boeing projects investments of $4.5 trillion for 34,000
new commercial airplanes to be delivered during the next 20 years.
Currently, Boeing jets are the mainstay of China's air travel and
cargo system. More than 50% of all the commercial jetliners
operating in China are Boeing airplanes. Some 6,000 Boeing
airplanes fly throughout the world with integrated China-built
parts and assemblies. China has a component role on every current
Boeing commercial airplane model - the 737, 747, 767, 777, as well
as the world's newest and most innovative airplane, the Boeing 787
Boeing enjoys a unique position as the largest aircraft
manufacturer in the world in terms of revenues, orders and
deliveries and is one of the largest aerospace and defense
contractors in the world. Besides, its revenues are spread across
more than 90 countries around the globe.
Boeing expects its full-year 2012 Commercial Airplanes' deliveries
to be between 585 and 600 airplanes, which are already sold out.
This includes an expected 70 to 85 787 and 747-8 deliveries.
Commercial Airplanes' 2012 revenue is expected to be between $47.5
billion and $49.5 billion with operating margin hovering around
Boeing currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering the fundamentals, we are
maintaining our Neutral recommendation on the stock. This is in
sync with other aerospace and defense behemoths,
General Dynamics Corporation
L-3 Communications Holdings Inc.