The Boeing Company
) announced that All Nippon Airlines or ANA Group has ordered 11
787-9 Dreamliners. The order, valued at $2.7 billion at current
list prices, brings the total number of 787s ordered by ANA till
date to 66 airplanes consisting of 36 787-8s and 30 787-9s.
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The airline has announced plans to launch a new route from Narita
to San Jose starting January 2013 using the 787, while current
services between Narita and Seattle will switch to 787 operations
on October 1, 2012 and Haneda to Beijing to the 787 on October 28,
The Boeing 787-9 Dreamliner is a slightly larger version of the
787-8 and can carry 250-290 passengers on routes spanning 8,000 to
8,500 nautical miles. The 787 provides airlines with higher fuel
efficiency, resulting in high environmental standards. According to
Boeing, the airplane uses 20% less fuel than its peers.
Boeing enjoys a unique position as the largest aircraft
manufacturer in the world in terms of revenues, orders and
deliveries, and is also one of the largest aerospace and defense
contractors. Besides, its revenues are spread across more than 90
countries around the globe.
Looking forward, Boeing in its 2012 Current Market Outlook
estimates a $4.5 trillion market for 34,000 new commercial
airplanes over the next 20 years. Boeing's projection of growth is
based on the strength of the commercial aviation market, recovery
witnessed in world economies and strong demand for fleet addition
and replacement. Airline traffic is forecast to grow at a 5% annual
rate over the next two decades, with cargo traffic projected to
grow at an annual rate of 5.2%.
Inspired by such strong projections, Boeing recently raised its
full-year 2012 earnings per share guidance to a range of
$4.40-$4.60 versus its earlier guidance range of $4.15-$4.35. The
company's revenue guidance for 2012 is in the range of $79.5-$81.5
billion versus the earlier range of $78.0-$80.0 billion. Commercial
Airplanes' 2012 deliveries are expected to be between 585 and 600
airplanes, which are already sold out. This includes an expected 70
to 85 787 and 747-8 deliveries. Commercial Airplanes' 2012 revenue
is expected to be between $47.5 billion and $49.5 billion with
operating margin hovering around 9.0%.
In the defense space, however, the threat of cutbacks will loom
over the company going forward. Overall, Boeing expects defense
revenue for 2012 to be between $31.5 billion and $32.0 billion with
operating margin greater than 9%.
Boeing currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering the fundamentals, we are
maintaining our Neutral recommendation on the stock. This is in
sync with other aerospace and defense behemoths,
General Dynamics Corporation
L-3 Communications Holdings Inc.