The Boeing Co.
) is flying high on the back of rising demand for its new
fuel-efficient commercial planes. The aerospace giant won a
contract, valued at $3.9 billion at list prices, from GE Capital
Aviation Services ("GECAS"), the commercial aircraft leasing and
financing unit of
General Electric Company
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This big order consists of 40 medium-haul passenger jets, evenly
split between the two models, the 737 MAX 8 and the
Next-Generation 737-800. Boeing had indeed booked this order from
GECAS last year. It had been listed as an unidentified buyer on
GECAS is considered to be the world's largest aircraft leasing
company and this collaboration further underpins the value of the
Next-Generation 737 and 737 MAX in the leasing market. Boeing
will introduce the upgraded versions of these two 787 variants
with new engines in 2017 particularly to save fuel.
The 737-800 comes in with the new Boeing Sky Interior which is
the latest in a series of enhancements for both airlines and
passengers. This variant has been Boeing's bestseller in the
single-aisle market. The single-aisle airplane is popular because
of its wide market base, performance efficiency and lower
The fourth generation of the 737 family - the 737 Max - is a
premier aircraft from Boeing's portfolio and sees brisk demand in
the single-aisle market for its fuel efficiency and low carbon
dioxide emissions. Powered by the Commercial Fan Motor ("CFM")
International LEAP-1B engines, the Advanced Technology winglet of
this airplane also enhances performance. Boeing's 737 MAX
competes with its European rival Airbus' A320 neo. To date, 32
customers have ordered 1,763 MAX airplanes.
In Oct 2012, GECAS ordered 75 Boeing 737 MAX jets and 10 737-800s
with an option for up to 15 additional 737-800s. With the new
order, the GE aircraft unit has ordered 638 airplanes from
Boeing. This comprises 737s, 747s, 757s, 767s, 777s and 787s. To
date, GECAS has been delivered 459 of these airplanes.
The single-aisle aircraft will continue to dominate, particularly
in the emerging markets where the middle-income passenger count
is expected to go up. The single-aisle fleet's share in the
global market is expected to increase from 14% to 20% by 2032.
This will certainly keep Boeing's cash register ringing.
However, the company's main rival Airbus poses a stiff challenge.
European aircraft maker Airbus beat Boeing with record sales and
orders in 2013. However, in terms of finished airplanes
delivered, Airbus came second to Boeing.
Boeing currently retains a Zacks Rank #2 (Buy). Other well-placed
operators in the aerospace and defense sector include
Huntington Ingalls Industries
Lockheed Martin Corporation
), both carrying the same rank as Boeing.