Boeing (BA) Secures 75 737 MAX Jets Order From Jet Airways

Aircraft giant, The Boeing Company (NYSE:BA) has recently received an order for delivering 75 737 MAX airplanes to Jet Airways. The order was confirmed by the airlines recently. Deliveries of these single aisle jets are expected to commence in mid-2018.

According to Reuters, the 75 planes boast an estimated value of $9.3 billion at list prices. Nevertheless, it goes without saying that the airlines will enjoy a substantial discount on this amount.

Jet Airways also stated that it may order another 75 737-MAX planes in the next few months in order to help it expand in the booming Indian market.

Markedly, the new 737s will feature the Boeing Sky Interior — the 787 Dreamliner inspired cabin — that provides passengers a sense of space with decorative sidewalls, larger windows, LED mood lighting and larger pivot overhead stowage bins.

Recent Deals

Demand for Boeing’s commercial airplanes has been rising owing to a steady increase in passenger and freight traffic. This has been more strongly reflected in recent times, when the aerospace behemoth successfully won a huge number of commercial contracts.

In addition to the aforementioned deal, other notable contracts secured by Boeing lately include a new order from Qatar Airways worth $2.16 billion in September. Per the order, Boeing will supply two 747-8 Freighters and four 777-300ERs (extended range) to the airline.

In August, the company finalized an order for delivering 12 737-MAX airplanes to Air Lease Corporation (NYSE:AL) . The deal comprises order for five 737 MAX 7s and seven 737 MAX 8s, besides two new orders for the 787-9 Dreamliner.

Single-Aisle Aircraft in Demand

Boeing anticipates demand for 29,530 single-aisle jets, worth $3.2 trillion, in the next 20 years. This projected figure reflects a 5% increase over last year's projection.

Moreover, the company expects single-aisle jets to be the major driver of demand growth, comprising 72% of the total commercial jets’ demand projection. While the new 737 MAX and the 737-800 is likely to grab the lion’s share of the new orders, Boeing’s arch-rival Airbus Group (PA:AIR) SE’s (OTC:EADSY) A320neo is expected to pose significant challenges.

Again, India appears to be another promising market for Boeing. According to the company's recent forecast, the country will need 1,780 new single-aisle planes in next 20 years.

However, Boeing’s 737 model remains one of the best-selling planes in the single-aisle market, thanks to its fuel efficiency and passenger comfort. Therefore, to maintain its dominant position in the aerospace market, the company continues to invest in research and development for upgrading and churning out upgraded versions of its existing planes.

Q3 Commercial Order & Backlog

A look at Boeing’s third-quarter order details reveals that the company booked 127 net commercial orders (accounting for cancellations). At the end of third quarter, the backlog of commercial airplanes touched 5,679. This clearly indicates the dominance and popularity of Boeing in commercial aerospace. The customers are willing to wait for years to get delivery for the high quality aeroplane Boeing offers.

Price Movement

Shares of Boeing have rallied 96% in the last 12 months, outperforming the industry’s gain of 55%. This could be because the company’s strong balance sheet and cash flows that provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.

Zacks Rank & Stock to Consider

Boeing carries a Zacks Rank #2 (Buy). Another top-ranked stock in the aerospace and defense sector is Leidos Holdings, Inc. (NYSE:LDOS) carrying the same bullish rank as Boeing. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Leidos Holdings delivered an average positive earnings surprise of 18.01% in the last four quarters. The Zacks Consensus Estimate for current-year earnings has climbed 1.1% in the last 30 days.

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