The Boeing Company
) has been awarded a contract by Virgin Australia to deliver 23
units of 737 MAX airplanes. This agreement also constitutes an
option to supply four additional 737 MAX airplanes to the client in
The 737 MAX is Boeing's newest family of airplanes comprising
737 MAX 7, 737 MAX 8 and 737 MAX 9. Equipped with the new-engine
variant powered by Commercial Fan Motor ("CFM") International
LEAP-1B engines, the 737 MAX is high on fuel efficiency and low on
carbon dioxide emissions. The use of Advanced Technology winglet
also enhances its performance. The interior of the airplanes
comprise pivoting overhead stowage bins, which add to the
spaciousness of the cabin. The bins give passengers more room to
keep a carry-on roll-aboard near their own seat apart from
providing additional leg space. The 737 MAX 8 is expected to incur
lowest operating costs in the single-aisle category.
The 737 MAX has a high demand in the single-aisle market. This
is primarily attributable to expansion of air services in India,
China Indonesia and several other emerging nations and the
popularity of the low-cost carriers ("LCC") business model around
the globe. In February 2012, Boeing received an order, worth 22.4
billion at list prices, from Indonesia-based Lion Air to supply 201
units of 737 MAXs and 29 units of Next-Generation 737-900ERs.
We view The Boeing Company as a well-positioned organization
with solid cash balance of $6.7 billion as of March 31, 2012. The
company recently released its 2012 current market outlook. It
estimates the market for new commercial airplanes to be worth $4.5
trillion over the next 20 years.
Boeing expects single-aisle airplanes to act as a positive
catalyst for future demand growth, accounting for about 68% of
estimated worldwide airplane deliveries from 2012 to 2031 and
approximately 45% of the total value of the deliveries. This is
apparent from the current worldwide demand for 23,240 Boeing
single-aisle jets worth roughly $2 trillion.
In addition, Boeing's growth projection is based on several
factors, which include strong demand for fleet addition and
replacement, a strong commercial aviation market and recovery
witnessed in world economies.
But at the same time, we are skeptical about U.S. defense budget
cutbacks, which might negatively impact the company's top and
The Boeing Company currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating. The company competes with
Lockheed Martin Corporation
Headquartered in Chicago, Boeing Company is a premier jet
aircraft manufacturer and one of the largest defense contractors in
BOEING CO (BA): Free Stock Analysis Report
LOCKHEED MARTIN (LMT): Free Stock Analysis
To read this article on Zacks.com click here.