The Boeing Company (BA) announced that it expects the Middle Eastern airlines will need an estimated 2,520 airplanes worth $450 billion by 2030. Boeing based its forecast on the Middle Eastern carriers continuing to surpass global air traffic and capacity growth rates.
Boeing estimates that the Middle East's fleet of passenger airplanes will grow from the current fleet of 1,040 airplanes to 2,710 airplanes, an increase of 160%. Of the projected demand, 34% will be replacement aircraft, while 66% will be for fleet expansion as the region's airlines gear up for significant growth over the next two decades.
Per Boeing, single- and twin-aisle airplanes will account for 90% of the Middle East's new airplane deliveries over the 20-year period. An estimated 1,160 single-aisle jets, such as the Boeing 737 MAX, and 1,110 twin-aisle airplanes, such as the Boeing 777 and 787 Dreamliner, are expected to be delivered to the region during this time.
The remaining 10% is split between large airplanes such as the Boeing 747-8 Intercontinental and will account for 7% of projected demand, with an estimated 180 airplanes to be delivered to airlines in the Middle East. Regional jets will account for the remaining 3%.
As of September 14, 2011, Boeing had an order backlog of 300 airplanes in the Middle East. Boeing currently has a total of 47 customers in the region that operate an estimated 1,200 flights per day on 425 Boeing airplanes.
Boeing has a unique position as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries. Besides, it is one of the largest aerospace and defense contractors in the world. Also, its revenues are spread across more than 90 countries.
Earlier, strong performance from the commercial airplanes business and stable core operations allowed Boeing to register a solid third quarter 2011. The company’s earnings surpassed both the year-ago results and the Zacks Consensus Estimates.
Boeing expects its fiscal 2011 revenue to be in the range of $68 billion – $70 billion. However, the company recently raised its earnings per share guidance for fiscal 2011 to $4.30 – $4.40 from the earlier band of $3.90 – $4.10 buoyed by strong performance across its core businesses.
The guidance incorporates the delivery initiation of revenue boosters like the 787 Dreamliner and 747-8 series, which started in the third quarter. However, the company revised the Commercial Airplanes' deliveries guidance for fiscal 2011.
Deliveries for fiscal 2011 are now expected to be approximately 480, down from the earlier range of 485 – 495. The reduction was due to lower planned deliveries on development programs (especially 787 and 747-8 units).
Boeing currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are maintaining our Neutral recommendation on the stock. This is in sync with other aerospace and defense behemoths like General Dynamics Corporation (GD) and Lockheed Martin Corporation (LMT).
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