The world’s leading commercial aircraft maker, The Boeing Company (BA) has received a confirmation from Ryanair, (RYAAY) the European low-cost carrier to supply 100 units of 737 MAX 200 for $11 billion at list prices.
The order was first announced in Sep, 2014. (Read more: Boeing Rises on $22 Billion 737 MAX 200 Order from Ryanair). It includes options for another 100 737 MAX 200 jets. With this order, Ryanair will become the launch customer for Boeing’s 737 MAX 200.
737 MAX 200: The Latest 737 Entrant
The 737 MAX 200 is an upgraded version of the 737 MAX 8. This new variant has the capacity to house 200 passengers, 11 more than the existing 737 jets. Higher capacity will enable Ryanair to increase passenger traffic to 150 million by 2024.
Moreover, the jets are powered by Commercial Fan Motor International LEAP-1B engines and Advanced Technology winglets to enhance performance.
Additionally, the pivoting overhead stowage bins are designed to increase cabin space. These bins give passengers more room to keep a carry-on roll-aboard near their own seat besides increasing leg space.
This aircraft is also 20% more fuel efficient than its peers in the single-aisle aircraft market.
Is Boeing eyeing the Low-Cost Carrier Market with the new 737- MAX 200?
We believe the latest fuel-efficient 737 MAX plane will boost revenues for Ryanair, by reducing its operating costs by 5% compared with 737 MAX 8. In addition, the extra leg room will enhance passenger satisfaction and thereby, drive customer loyalty.
The low-cost carrier market is witnessing tremendous growth. Rising traffic pattern attributable to higher business activities is expected to accelerate the demand for these airplanes significantly. Moreover, it is expected that low-cost carriers will make up for 35% of single-aisle airline capacity by 2033.
Needless to say, Boeing wants to grab its share in the growing low-cost carrier market. This has encouraged the company to roll out the premier 737 MAX 200 jets.
Recently, Boeing announced that it will boost the 737 output to 52 airplanes per month in 2018, up from the existing 42 and from the planned level of 48 in 2017. Boeing already has orders for more than 2,550 737 MAXs.
Zacks Rank
Boeing carries a Zacks Rank #3 (Hold). Some better-placed stocks in the same sector include General Dynamics Corp. (GD) and Engility Holdings, Inc. (EGL). Both these stocks sport a Zacks Rank #2 (Buy).
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