Markets
BA

Boeing (BA) Wins Big Orders for Airplanes at Paris Air Show

A pen notebook and calculator laying on top of sheets of paper
Credit: Shutterstock photo

Leading commercial aircraft maker The Boeing CompanyBA nabbed a number of orders worth billions at the 2017 Paris Air Show for its commercial jets.

Details of the Deals Won

Boeing received a commitment from the Kuwait-based ALAFCO Aviation Lease and Finance Company − a global provider of commercial aircraft leasing products for 20 737 MAX 8s - valued at $2.2 billion at current list prices. ALAFCO already has unfilled orders for 20 737 MAX airplanes. If finalized, this agreement will boost ALAFCO's order to 40 737 MAXs.

Additionally, Boeing has got commitment for 50 737 MAX 10 airplanes, valued at approximately $6.24 billion at list prices, from Lion Air Group.

The aerospace behemoth signed a memorandum of understanding (MOU) with SpiceJet for 40 737 MAX airplanes. The agreement is valued at $4.7 billion at current list prices and includes 20 new orders for the 737 MAX 10 and conversions of 20 of the low-cost carrier's 737 MAX 8 airplanes from its existing order to 737 MAX 10s.

The company signed another MOU with Tibet Financial Leasing for 20 737 MAX airplanes. The airplanes are valued at approximately $2.5 billion at current list prices. The order includes 737 MAX 10 and 737 MAX 8 airplanes.

Boeing also signed MOU for 42 737 MAX 8s, 10 737 MAX 10s and eight 787-9 Dreamliners with CDB Aviation Lease Finance, based in Dublin, Ireland. The company operates as a wholly owned Irish subsidiary of China Development Bank Financial Leasing Co Ltd. Valued at $7.4 billion at list prices, this commitment marks CDB Aviation as one of the launch customers for the 737 MAX 10. Furthermore, this agreement includes transitioning of six 737 MAX 8 orders to the new 737 MAX 10s by the lessor from a previous order.

Another MOU was signed by Boeing with BOC Aviation Limited for 10 737 MAX 10 airplanes, subject to internal approvals. The agreement is worth nearly $1.25 billion at list prices.

Moreover, Boeing's 18 737 MAX 10s has been selected by TUI Group, the world's number one tourism business, who already had 70 unfilled orders for the 737 MAX. The latter will transition 18 of these existing orders to the 737 MAX 10. Notably, it is the first European operator to opt for the latest member of the 737 MAX family of airplanes.

Apart from this, the company bagged an order from AerCap for 30 787-9 Dreamliners, worth $8.1 billion at list prices. With this agreement, AerCap becomes the largest customer for the 787 Dreamliner.

Additionally, Boeing won an order from United Parcel Service, Inc. UPS to switch three 767 passenger airplanes into Boeing Converted Freighters.

The aircraft manufacturer received an order for 20 737 MAX 10s from GE Capital Aviation Services (GECAS), the commercial aircraft leasing and financing arm of General Electric Co. GE . The order covers converting 20 of its current MAX orders to the larger MAX 10. GECAS has 170 737 MAX airplanes on order, the largest of any aircraft leasing company.

Moreover, Boeing and Aviation Capital Group (ACG) announced an order for 20 737 MAX 10 airplanes, valued at $2.49 billion at list prices. The order adds ACG to the growing launch group of the newest, largest member of the 737 MAX family. The addition of the 737 MAX 10 will provide its customers with additional capacity and the lowest costs per-seat of any single-aisle airplane.

Again, Okay Airways placed an order for 15 737 MAX airplanes, valued at $1.8 billion at current list prices. The order comprise eight 737 MAX 10s and seven 737 MAX 8s. With the order, Okay Airways becomes one of the launch customers of the 737 MAX 10. The airline also signed a MOU with Boeing for five 787-9 Dreamliners as part of its long-term fleet strategy and expansion.

Boeing received an order from Norwegian for two additional 737 MAX 8s valued at $225 million at current list prices.

Notably, Boeing's 737 MAX family of commercial aircraft incorporates the latest-technology CFM International LEAP-1B engines to deliver the highest efficiency, reliability and passenger comfort in the single-aisle market. Particularly, these jets boast a 40% smaller noise footprint than today's single-aisle airplanes.

Single-Aisle Aircraft in Demand

Over the next 20 years, Boeing envisions demand for over 39,620 commercial airplanes, valued at more than $5.9 trillion. About 38% of the total commercial demand is likely to come from Asian markets. Single-aisle airplanes will comprise nearly 70.6% of the new deliveries, with airlines requiring over 28,140 jets of this category.

Boeing expects single-aisle jets to be the major driver of demand growth, comprising 71% of the total projection. While the new 737 MAX 8 and 737-800 will likely grab a lion's share of the new orders, Boeing's arch rival Airbus Group SE's EADSY A320neo is expected to pose a significant competitive challenge.

Boeing's 737 is one of the best-selling planes in the single-aisle market, thanks primarily to its fuel efficiency and passenger comfort. To maintain its dominance in the commercial aerospace market, the company continues to invest in research and development to upgrade and churn out upgraded versions of its existing planes.

Q1 Order Details

Looking at Boeing's first-quarter order details, we note that the company booked 198 net commercial orders (accounting for cancellations). This reflects a decline from the year-ago figure of 768. The figure included 167 orders for the 737, 15 for the 767, 11 for the 787, and nine for the 777 jets. The figure is adjusted for loss of four orders for the 747 model.

On the contrary, Airbus registered net bookings of just six aircraft, trailing far behind Boeing. Since, Boeing and Airbus are the two largest players in the commercial aircraft space their direct rivalry is quite evident, which leads to intensifying competition in the industry. The enhanced orders place Boeing in a better position in the industry.

Price Movement

Share price of Boeing has increased 49.9% over the last 12 months, outperforming the Zacks categorized Aerospace-Defense industry's gain of 26.8%. This could be because the company's strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases as well as earnings accretive acquisitions.

Zacks Rank

Boeing currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Boeing Company (The) (BA): Free Stock Analysis Report

Airbus Group (EADSY): Free Stock Analysis Report

General Electric Company (GE): Free Stock Analysis Report

United Parcel Service, Inc. (UPS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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


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

In This Story

BA GE EADSY UPS

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More