The Boeing Co. BA has entered into the largest commercial transaction ever with Panama under which the aerospace behemoth received a firm order for 61 of its new 737 MAX single-aisle jets. The agreement is valued at $6.6 billion, at list prices. The signing ceremony took place in Panama City where the U.S. President was attending the seventh Summit of the Americas.
Per the agreement, Panama’s Copa Airlines will buy 61 737 MAX 8 and MAX 9 airplanes from Boeing, which will help the airline to upgrade its existing fleet of older 737 models. This Panama carrier will be the first in the region to operate the 737 MAX 9 on deep South American routes. It already connects to 73 destinations in 30 countries from its hub in Panama City. In recent years, Panama has strong links with cities in North, South and Central America.
Apart from strengthening Boeing’s foothold in Latin America, Obama is also seeking to reassert U.S. influence in the region while reinstating friendliness with many of the 35 nations represented at the summit. In recent times, the U.S. has remained isolated over its policies toward Cuba. As Panama attended the gathering for the first time, Obama’s move to interact with Panamanian President Juan Carlos Varela Rodriguez has won whole-hearted appreciation from other Latin American leaders.
For Boeing, the transaction is expected to boost its sales of 737 Max planes this year. The fourth generation of the 737 family – the 737 Max – is a premier aircraft from Boeing’s stable and sees brisk demand in the single-aisle market for its fuel efficiency and low carbon dioxide emissions. Powered by Commercial Fan Motor (“CFM”) International LEAP-1B engines, the Advanced Technology winglet of this airplane also enhances performance.
This aircraft is 14% more fuel efficient as well as reduces operational noise by 40% than its closest peer in the single-aisle aircraft market. Boeing’s 737 MAX has gathered over 2,715 orders to date from 57 countries worldwide.
Continuous order flows are a testimony to Boeing’s dominance in the flourishing commercial airplanes market. Indeed, this commercial aerospace behemoth is flying high on the back of rising demand for its new fuel-efficient commercial planes.
The company once again reported upbeat commercial deliveries – the first-quarter number jumped over 14% year over year. The Next Generation 737 model continued to be the pillar of Boeing’s strength in the commercial airplane sector with deliveries of 121 airplanes, followed by its 787 Dreamliner model with 30 deliveries.
Boeing currently holds a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include Huntington Ingalls Industries, Inc. HII, sporting a Zacks Rank #1 (Strong Buy) and Air Industries Group AIRI and Northrop Grumman Corp. NOC, having a Zacks Rank #2 (Buy).
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