Boeing Wins Order For 15 737 MAX 10 Jets From Copa Holdings

Leading commercial aircraft maker The Boeing Company (NYSE:BA) has received an order for 15 737 MAX 10 jets. The order was placed by Copa Holdings S.A. (NYSE:CPA) at the 2017 Paris Air Show.

Details of the Deal

With the current order, Copa Airlines will be one of the launch customers of the 737 MAX 10 airplane. Also, it will become the first airline in Latin America to operate the newest MAX-edition jet. The current order will transform its previously placed order of 737 MAX 8 aircraft to 737 MAX 10 airplanes.

The airlines will use these jets to replace its existing jets and support its plans for strategic growth. This, in turn, will make Copa Airlines the first carrier in the region to run the 737 MAX on deep-South American and North American routes.

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. In particular, these jets boast a 40% smaller noise footprint than today's single-aisle airplanes.

Other Deals Signed at the Ongoing Paris Air Show

Demand for Boeing’s commercial airplanes has been on the rise owing to a steady increase in passenger and freight traffic. In addition to the aforementioned deal, Boeing grabbed other notable contracts at the Paris Air Show, including a commitment from the Kuwait-based ALAFCO Aviation Lease and Finance Company for 20 737 MAX 8s, valued at $2.2 billion at current list prices. Moreover, Lion Group committed to buy 50 737 Max 10 jets from the company for $6.24 billion.

Further, the aerospace behemoth signed a memorandum of understanding (MOU) with SpiceJet for 40 737 MAX airplanes, valued at $4.7 billion. Another MOU was signed with Tibet Financial Leasing for 20 737 MAX airplanes, valued at approximately $2.5 billion. It also signed MOU with BOC Aviation Limited for 10 737 MAX 10 airplanes, worth nearly $1.25 billion.

Apart from this, the company clinched an order from AerCap for 30 787-9 Dreamliners, worth $8.1 billion. Given the enormous commercial demand in the market, Boeing is expected to witness significant traction, especially in the single-aisle market.

Single-Aisle Aircraft in Demand

Over the next 20 years, 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, Boeing 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 is likely to grab a lion’s share of the new orders, Boeing’s arch-rival Airbus Group (PA:AIR) SE’s (OTC:EADSY) A320neo is also expected to pose a significant competitive challenge.

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

Q1 Order Details

A look at Boeing’s first-quarter order details shows that the company booked 198 net commercial orders (accounting for cancellations). This reflects a decline from the year-ago figure of 768. 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.

Other Players in the Space

Undoubtedly, Boeing and Airbus dominate the commercial aerospace manufacturing market as major airlines worldwide uses their airplanes. Nevertheless, Canada’s Bombardier Inc. and Brazil’s Embraer S.A. (NYSE:ERJ) are also in the commercial race although their presence in the market is negligible compared with the former two.

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