The Boeing Co. BA is all set to grab another big Dreamliner order. China’s fourth-largest carrier − Hainan Airlines Co. Ltd. – said that it has plans to buy 30 Boeing 787-9 Dreamliners. The deal is valued at as much as $7.7 billion at list prices, though the customer might get a heavy discount.
This proposed deal − which has been announced by Hainan in a regulatory filing – will boost Boeing’s order backlog of Dreamliner jets to 855 planes. The latest deal will also mark as the biggest order so far this year for the jet. Hainan Airlines will take delivery of the first 787 by 2021.
The 787-9 is the next generation of the flagship Dreamliner. Compared to its predecessor, the new model has an extended fuselage structure, which enables it to carry 280 passengers over a distance of 8,300 nautical miles. Other benefits of the 787-9 include fuel efficiency and lower emissions. It burns 20% less fuel, resulting in an exceptional environment-friendly performance. It incorporates the design of the 787-8 model, while boasting features like modern LED lighting, large windows, lower cabin altitude and cleaner air, all geared toward enhancing passenger comfort.
The pending deal will multiply Hainan’s current Dreamliner fleet of nine and will be the largest transaction for the jet since 2013.
Boeing had earlier predicted that China will eventually beat North America as the biggest air-travel market in the next two decades. Commercial airplane demand on the whole is expected to surge owing to rising passenger traffic in Asia-Pacific. The International Air Transport Association forecasts a roughly 7% increase in global air traffic in 2015 as compared to 2014, which will likely lead to higher demand for Boeing airplanes. In this context it is worth noting that the commercial airplane manufacturing industry is largely a duopoly with Airbus and Boeing in head-to-head competition.
Boeing’s commercial delivery of 723 planes during 2014 accelerated 11.6% year over year thanks to robust 737 and 787 deliveries. The company delivered its 787 at a rate of nearly 12 per month in the fourth quarter, up from about 9 a month during the rest of 2014.
The company plans to boost its 737 output to 52 airplanes per month in 2018 from the existing 42 and from a planned level of 48 in 2017. This will mark yet another new production record for any jet in history, with an annual rate of 624 737s per year.
For Boeing, the title of the world's largest airplane manufacturer maybe attributed to its impressive track record in both innovation and fuel efficiency. We expect Boeing to continue to notch up record jet deliveries in the future driven by growing passenger traffic in Asia-Pacific.
Currently, Boeing has a Zacks Rank #3 (Hold). Better-ranked players in the aerospace and defense industry include Huntington Ingalls Industries, Inc. HII, Northrop Grumman Corp. NOC and Rockwell Collins Inc. COL. Huntington Ingalls carries a Zacks Rank #1 (Strong Buy), while Northrop and Rockwell Collins hold a Zacks Rank #2 (Buy).
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