The Boeing Company
) has received an order worth $6 billion at current list prices
for 60 737 MAX airplanes from Aviation Capital Group ("ACG"). The
order, consisting of 50 737 MAX 8s and 10 737 MAX 9s was
finalized last month.
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The Boeing 737 MAX - is a new family of aircraft being developed
by Boeing Commercial Airplanes. It is based on the Boeing 737
Next-Generation family and is the fourth generation of the 737
The Boeing 737 MAX is an improvised version of the
Next-Generation 737. It has more advanced fuel efficiency as it
is equipped with new LEAP-1B engines from CFM International and
improvements such as the Advanced Technology Winglet. Apart from
maintaining an 8% operating cost advantage, Boeing 737 MAX's
developed technology reduces fuel burn and CO2 emissions by
nearly 13%. Moreover, its noise footprint is 40% smaller than
other current single-aisle airplanes. The first delivery of 737
MAX is expected in 2017.
These non-comparable efficiencies have helped Boeing in creating
a remarkable number of orders. With this order in hand, Boeing
now has orders for 1,029 737 MAX airplanes from airlines and
leasing companies worldwide. In October 2012, Boeing had also
received an order worth $5 billion for 20 737 MAX 8s, 17 737 MAX
9s and 13 Next-Generation 737-900ERs.
Boeing is trying to move hand in hand with the growing number of
orders. During the first quarter of 2012, production had
increased from 31.5 to 35 airplanes per month. The company
continues to increase the production rate to 38 airplanes per
month beginning in 2013 and 42 airplanes per month beginning in
2014. In first half of 2012, the majority of orders received were
for 737 MAX.
Based in Chicago, Boeing Company is a premier jet aircraft
manufacturer and one of the largest defense contractors in the
U.S. The company's customers include domestic and foreign
airlines, the U.S. Department of Defense, the Department of
Homeland Security, the National Aeronautics and Space
Administration, other aerospace prime contractors, and certain
U.S. government and commercial communications customers.
The Boeing Company is among the best positioned in its sector due
to its balanced exposure to commercial aircraft and defense
equipment. Boeing's revenue exposure is spread across more than
90 countries around the globe.
Due to the continuing recovery of the global economy, demand for
Boeing's Commercial Airplanes is benefiting from a steady
improvement in passenger and freight traffic. Moreover, this
continuous increase in number of orders would boost the company's
top and bottom lines.
However, headwinds over the global airline industry along with
expected cutbacks in the U.S. defense budget are the major
concerns. The company presently retains a short-term Zacks #3
Rank (Hold) that corresponds with our long-term Neutral
recommendation on the stock.
The company mainly competes with
Lockheed Martin Corporation
Northrop Grumman Corporation