The Boeing Co. BA received a commitment from the Air China affiliate − Shenzhen Airlines − for 46 737 planes, as per media reports. The deal for these single-aisle jets is valued at $4.3 billion at list prices.
In a filing with the Shanghai stock exchange, Beijing-based Air China revealed that the airline will take delivery of the planes over five years from 2016 to 2020. China’s largest carrier by market value, Air China, also disclosed that the latest order will boost Shenzhen Air’s capacity by 6% from 2014.
The unprecedented rise in passenger traffic in the Asia-Pacific region is bringing in a steady flow of orders. The 737 family of airplanes is witnessing a sharp rise in demand in the commercial aircraft market, primarily in China, India, the Middle East and Africa, and other emerging countries due to the growing popularity of the low-cost carrier business.
Last month, Boeing nabbed a $6.1 billion order from a Chinese consortium for its single-aisle 737 Max jets. Chinese carrier Ruili Airlines and two leasing companies − AVIC International Leasing Co Ltd and Minsheng Financial Leasing Co Ltd − have signed a deal with the aerospace behemoth for 60 narrow-bodied 737 Max models.
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.
This Chicago based premier jet aircraft manufacturer recently reported strong delivery numbers for the first quarter. In its first quarter of 2015, Boeing delivered 184 commercial airplanes, approximately 14.3% higher than the year-ago figure. The Next Generation 737 model continued to be the pillar of Boeing’s strength in the commercial airplane sector with deliveries of 121 airplanes.
Currently, Boeing has a Zacks Rank #3 (Hold). Some better-ranked players in the aerospace and defense industry include General Dynamics Corp. GD, Raytheon Co. RTN and Northrop Grumman Corp. NOC, carrying a Zacks Rank #2 (Buy).
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