Leading commercial airplane producer,
) has started the iconic Farnborough International Airshow, held in
Hampshire, UK, with a bang by securing three multi-billion dollar
order commitments for its 737 model.
The first firm order came in from
Air Lease Corporation
) for 60 '737 MAX 8 and 15 '737 MAX 9 airplanes and reconfirmation
rights for another 25 '737 MAX airplanes. The total value of the
order at list prices is pegged at $7.2 billion.
This was followed by an even bigger commitment from GE Capital
Aviation Services (GECAS), the commercial aircraft leasing and
financing arm of
), to purchase 75 '737 MAX 8s and 25 Next-Generation 737-800s. The
deal valued at $9.3 billion is at list prices.
Boeing also received commitment for 20 '737 MAX 8s from Kuwait
airplane leasing company ALAFCO. This deal is valued at $1.9
billion at current list prices.
The Boeing 737 MAX is popular 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
Additionally, the pivoting overhead stowage bins add to the
spaciousness of the cabin. The bins give passengers more room to
keep a carry-on roll-aboard near their own seat besides providing
extra leg space. At the end, the 737 MAX 8 is expected to incur the
least operating cost in the single-aisle category.
Historically, Boeing offers generous discounts to customers when
it comes to securing big orders. Even then, we believe these
multi-billion dollar commercial airline contracts will definitely
act as a positive catalyst, boosting overall performance, amidst
the threat of cutback in the U.S. defense budget.
We believe this commercial order booking in the international
airshow will compensate for the lull in order booking experienced
by Boeing during the second quarter of 2012. It had secured orders
for just 36 airplanes in the said quarter.
Boeing's international arch rival Airbus also secured a $4.2
billion order for its A350 passenger jets. The order for new
airplanes surely indicates a gradual recovery in the commercial
Chicago-based The Boeing Co. currently has a Zacks #3 Rank
(short-term Hold rating). We also maintain a long-term Neutral
recommendation on the stock.
AIR LEASE CORP (AL): Free Stock Analysis Report
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GENL ELECTRIC (GE): Free Stock Analysis Report
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