Aerospace giant, The Boeing Co. BA unveiled the first 737 MAX airplane on Tuesday. This marks the biggest upgrade of the company’s most popular jet in 19 years, indicating that the aircraft is on track for its first flight in early 2016.
The Roll Out
On Nov 30, the aircraft was rolled out of a Renton, WA factory, into a paint hangar, following the exact timeline set over four years ago when the MAX development schedule was first defined. The final assembly of the first 737 MAX 8, named the Spirit of Renton, made without much fanfare. Once celebrations are over, the airplane will be subject to pre-flight preparation in the factory before leaving for Renton Field for flight tests.
The second and third 737 MAX 8 flight test airplanes are presently in final assembly, while the fourth (and final) is in sub-assembly. Its first delivery will be to Southwest Airlines in the third quarter of 2017.
About the 737 MAX
The 737 MAX is the fourth generation of the 737 family of aircraft, replacing the 737 Next Generation. Notably, the new jets use the bigger and more efficient CFM International LEAP-1B engines. The aircraft offers more aerodynamic wings and winglets, and its cockpit displays have been borrowed from the 787. Moreover, it is 20% more fuel efficient than its predecessors, with 8% less operating costs than Airbus Group SE's EADSY A320neo.
According to Bloomberg, as of the end of third-quarter 2015, Boeing had 4,243 unfilled orders for the 737, including both the current and MAX versions, Boeing's current production rate for the 737 is 42 jets a month, which is expected to increase to 52 by 2018.
Boeing’s Performance in the First Nine Months of 2015
The U.S. aerospace giant reported strong delivery numbers for the first nine months of 2015 on the back of continued growth of its 787 Dreamliner and Next Generation 737 single-aisle jetliners, beating its archrival, Airbus Group. Total commercial airplane deliveries were 580 during this period. The company’s 737 jet deliveries were 375.
Boeing is the largest aircraft manufacturer in the world in terms of revenue, orders and deliveries. Its revenue exposure is spread across more than 90 countries around the globe. Demand for Boeing’s commercial airplanes is on the rise due to a steady improvement in passenger and freight traffic on the back of a recovering global economy. Boeing’s commercial revenues increased 10% year over year in the third quarter of 2015 on as many as 199 commercial deliveries.
Boeing earlier projected that demand for jetliners will be up by 3.5% over the next 20 years. Single-aisle, narrow body jets, like the new 737 MAX 8, will account for 26,730 jets worth $2.7 trillion, comprising 70% of the total projection.
Zacks Rank
Boeing currently has a Zacks Rank #2 (Buy). A couple of other favorably placed stocks in the aerospace and defense sector are Huntington Ingalls Industries, Inc. HII and General Dynamics Corporation GD. Both companies carry the same rank as Boeing.
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