The Boeing Co. BA won an order for three of its 747-8 freighter airplanes from Azerbaijan-based Silk Way West in a deal valued at approximately $1.1 billion. The deal is indeed sweet for Boeing as its biggest and most pricey model had ended 2014 with no net orders.
Silk Way West is a unit of Silk Way Group comprising 23 companies working in the aviation and related services industry. The airline already operates seven Boeing airplanes that include two 767-300 Freighters, three 747-400 Freighters and two 747-8 Freighters.
The wide-body jet airliner – Boeing 747-8 – is the fourth-generation Boeing 747 version, with lengthened fuselage, redesigned wings and improved efficiency. The jet airliner comes in two main variants – the 747-8 Intercontinental (747-8I) for passengers and the 747-8 Freighter (747-8F) for cargo.
Given a tepid cargo market, Boeing decided to slow down the production of its wide-bodied jet airliner in Dec 2014 to 1.3 aircraft a month from 1.5. The production slowdown will lower 747 annual deliveries to approximately 16 from 18 starting Sep 2015. Boeing cited lower-than-expected recovery in the cargo market as the reason behind the cut. This will enable Boeing to better execute its Commercial Airplanes business.
Boeing had already cut its 747 production in 2013 to 1.5 planes annually. Since the first delivery in 1970, Boeing has delivered 1,498 units of its iconic 747 airplane. Boeing has delivered 19 747s through Dec 2014, at a rate of about 1.5 per month. The company still has faith in the longer-term strength of the freighter market.
Well-placed stocks in the same sector include Huntington Ingalls Industries, Inc. HII, Northrop Grumman Corp. NOC and Rockwell Collins Inc. COL.
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