Boeing Wins $8.8B Order from Singapore-Based BOC Aviation - Analyst Blog

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The Boeing Co. ( BA ) won a sizable order from the Singapore-based aircraft-leasing company of the Bank of China Ltd. - BOC Aviation Ltd - for 82 Boeing jets. The contract is valued at $8.8 billion at list prices.

This whopping order comprises 80 single-aisle Boeing 737 jets that include 50 737 MAX 8s. The contract also covers 30 next-generation 737-800s and two extended-range 737-300ERs. These planes are scheduled to be delivered from 2016 through 2021.

The 737-800 fleet belonging to the Next-Generation 737 family comes with high performance efficiency and lower operating cost while the 737 Max is equipped with cutting-edge CFM International LEAP-1B engines to deliver maximum efficiency, reliability and passenger comfort. The 737 Max boasts of an 8% operating cost per seat advantage over its peers.

777-300 ER is one of the most advanced twin-engine, long-haul airplanes. The 777-300ER is equipped with the world's most powerful GE90-115BL commercial jet engine, and has a maximum range of 7,825 nautical miles (14,490 kilometers).

The unprecedented rise in passenger traffic in the Asia-Pacific region is bringing in a steady flow of orders. Going ahead, the projected 5.7% increase in airline traffic by 2017, as revealed by the International Air Transport Association (IATA), would boost Boeing's commercial airplane order book.

Earlier, Boeing had already revealed that Asia-Pacific will require 12,820 airplanes worth $1.9 trillion in the next two decades. The deliveries will account for a sizeable 36% of the global commercial airplane delivery in the aforesaid period. These deliveries will triple the size of the Asia-Pacific aircraft fleet by 2032 from 2012 levels.

Not surprisingly, Boeing is likely to be a major beneficiary of this demand explosion, as nearly 69% of the new additions will be in the single-aisle market. The emphasis being on swift, low-cost travel, Boeing with its fuel efficient single-aisle airplanes like the Next-Gen 737 and the 737 MAX will definitely secure a good many of these potential orders.

In the second quarter 2014, Boeing delivered 181 commercial airplanes, approximately 7.1% higher than the year-ago number. During the quarter, the Next Generation 737 model proved yet again its unfailing popularity, delivering 124 airplanes.

Boeing currently has a Zacks Rank #2 (Buy). Other companies in the defense space worth considering include Air Industries Group ( AIRI ), Lockheed Martin Corp. ( LMT ) and General Dynamics Corp. ( GD ). Air Industries carries a Zacks Rank #1 (Strong Buy), while Lockheed and General Dynamics hold the same rank as Boeing.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BA , GD , LMT , AIRI

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