Multi-Billion Dollar Deal for Boeing (BA) (GD) (GE) (LMT)

Zacks

The Boeing Company (BA) announced that it has received an order from Dubai-based Emirates Airline for 50 long-range, twin-engine jet 777-300 Extended Range aircraft. The order is valued at $18 billion. The aircraft would be powered by General Electric Company's (GE) GE90-115B engines.

The order, agreed upon at the Dubai Air Show, is the single largest commercial airplane order in Boeing's history by dollar value. The order also includes an option for an additional 20 of twin-aisle commercial jetliner for about $8 billion.

The 50 airplane order also makes fiscal 2011 the best-selling year for the 777 program, surpassing the previous record of 154 orders set in 2005. With the Emirates order, the 2011 net order book for the 777 currently stands at 182.

Emirates is the world's largest 777 operator with a fleet of 94 777s through direct purchase and lease, plus additional unfilled orders on backlog for 41 777-300ERs previously on order. It is also the only airline in the world to operate every model in the Boeing 777 family, including the 777 Freighter. Emirates took delivery of its first Boeing 777 series aircraft in 1996.

The Boeing 777 is the world's most successful twin-engine, long-haul airplane. The 777-300ER extends the 777 family's span of capabilities, bringing twin-engine efficiency and reliability to the long-range market. The airplane carries 365 passengers up to 7,930 nautical miles or 14,685 km.

Boeing has a unique position as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries. Besides, it is one of the largest aerospace and defense contractors in the world. Also, its revenues are spread across more than 90 countries around the globe.

Earlier, strong performance from the commercial airplanes business and stable core operations allowed Boeing to register a solid third quarter in 2011. The company’s earnings surpassed both the year-ago results and the Zacks Consensus Estimates.

Boeing expects its fiscal 2011 revenue to be in the range of $68 billion – $70 billion. However the company recently raised its earnings per share guidance for fiscal 2011 to $4.30 – $4.40 from the earlier band of $3.90 – $4.10 buoyed by strong core performance across its businesses.

The guidance incorporates the delivery initiation of revenue boosters like the 787 Dreamliner and 747-8 series, which started in the third quarter. However, the company revised the Commercial Airplanes' deliveries guidance for fiscal 2011.

Deliveries for fiscal 2011 are now expected to be approximately 480, down from the earlier range of 485 – 495. The reduction was due to lower planned deliveries on development programs (especially 787 and 747-8 units).

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 like General Dynamics Corporation (GD) and Lockheed Martin Corporation (LMT).

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