International commercial aircraft manufacturer,
The Boeing Company
) once again reported strong 2013 deliveries making it the
world's biggest plane maker for the second straight year. The
aerospace major reported record jet deliveries for 2013, beating
its own projection, driven by strong commercial numbers. The
heightened deliveries were also a function of an increased
Boeing's commercial delivery of 648 planes during 2013
accelerated 7.8% year over year thanks to robust 787 Dreamliner
deliveries, which showed no slowing down even in the face of a
series of technical glitches. The year-end figure is likely to
beat deliveries of its main European rival Airbus, which has set
a target of 620 deliveries in 2013. Airbus is scheduled to report
its annual orders and deliveries on Jan 13.
Boeing dispatched a record number of 737 and 777 airplanes,
representing growth of 6% and 18%, respectively, year over year.
Notably, deliveries of the company's much talked about Dreamliner
soared 41.3%. In 2013, the company booked 1,531 gross commercial
orders, up 14% from the prior year aided by huge orders from the
Dubai Airshow held in November.
During the fourth quarter, Boeing delivered 172 jets compared
with 165 deliveries in the comparable period last year. During
the quarter, the 737 model continued to be the pillar of Boeing's
strength in the commercial airplane sector with deliveries of 110
airplanes, followed by its 777 and 787 models with 25 deliveries
each. In the year-earlier period, the company delivered 105 units
of the 737, 21 units of the 777 model and 23 units of 787.
Meanwhile, Boeing's deliveries in the defense and space business
numbered 52 in the fourth quarter and 171 in 2013 compared with
35 in the fourth quarter of 2012 and 154 in 2012. In 2013,
numbering among the total deliveries were 48 F/A-18E/F and EA-18G
fighter jets, 44 Chinook helicopters, and 37 Apache helicopters.
The company also delivered 14 units of F-15, 11 P-8, 10 C-17 and
The gradual recovery in the global economy is bringing in a
steady improvement in passenger and freight traffic. This is
amply reflected in Boeing's swelling order book. After dominating
the Dubai Air Show with orders worth $101.5 billion, Boeing looks
to be in an advantageous position when compared to archrival
Recently, Boeing successfully resolved a crucial labor conflict
by signing a deal with the members of the International
Association of Machinists and Aerospace Workers last Friday,
related to its new 777X aircraft production. With a 51% vote, the
workers grudgingly approved of an eight-year contract extension
that assures production of Boeing's 777X aircraft in the Puget
Sound area of Washington. This new agreement, which is effective
through 2024, is in addition to the existing contract running
The vote ensured that Boeing will be able to maintain its
manufacturing operations at its commercial hub. As a result
Boeing will not only avoid the risk of building new facilities
and training a workforce for 777X production elsewhere but also
considerably control costs.
At the same time, we are cautious of the headwinds in the global
airline industry and cutbacks in the U.S. defense budget that
have certainly shaken the confidence of many investors. The
threat of sequestration has created significant planning
difficulties for the customers and the aerospace industry at
Boeing currently has a Zacks Rank #3 (Hold). Better-ranked stocks
from the sector include
General Dynamics Corp.
Lockheed Martin Corp.
Northrop Grumman Corp.
), all with a Zacks Rank #2 (Buy).
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