Boeing Sees Market Strength At Paris Air Show

Jun.25.13 | About: The Boeing (BA)

The conclusion of the Paris Air Show, which attracted more than 200,000 visitors, highlights that all is well in the industry. Results were strong and the mood among companies was upbeat.

Overall, Airbus claimed orders valued at $68.7 billion dollars; commitments for 466 aircraft, 241 of which were firm purchase orders. Boeing announced orders worth $66 billion; and orders and commitments for 442 aircraft. Historically, Airbus, a French company announces more sales at the show while Boeing (NYSE:BA) announces them more frequently throughout the year.

Some observations and insight from the show:

  1. There were a number of big orders from the aircraft leasing companies that were very active.
  2. Boeing has just shy of 700 orders for the year, Airbus around the same.
  3. There was a breadth of orders both in terms of geography and in the types of planes ordered.
  4. Boeing stated that the global commercial airline fleet will double to more than 41,000 planes by 2032. Demand for 35,280 new planes is valued at $4.8 trillion before discounts
  5. Growth is fueled by emerging market demand and the retirement of older jets for those offering better fuel economy
  6. According to Randy Tinseth, Boeing's VP of Marketing, there is upward pressure on production rates. With massive backlogs, which extend through the end of the decade, increases in production rates for the 737 and 787 are likely.
  7. Long-term demand for air cargo freighters was reduced (from 7950 planes to 7830 planes) reflecting slowing economic conditions regarding the transport of cargo
  8. Boeing announced the 787-10, a stretched version of the 787 Dreamliner. The plane will seat between 300-330 people, fly 7000 nautical miles, and be 25% more efficient than planes offered today
  9. The Airbus A350, a direct competitor to Boeing's 787 Dreamliner had its maiden flights at the show but sales have been slower than Boeing for the 787.
  10. Since 2010, 3500 Boeing 737 Max and Airbus 320 Neos have been sold. There's another 20,000++ orders to be identified and manufactured

Boeing Orders

  • Air Lease: (3) 787-9s, (30) 787-10s
  • Korean Air: (5) 747-8 intercontinental, (6) 777-300 extended range
  • Qatar Air: (7) 777-300 ER, (2) 777-300 ER firm
  • Gecas: (1) 787-10x
  • Ryanair: (175) Next Generation 737-800s (originally announced as a commitment in March, Valued at $15.6 billion, the largest order ever from a European airline).
  • SkyMark Airlines: (4) 737 Max
  • CIT: (30) 737 Max 8 (valued at $3 billion), this includes 10 new aircraft and conversion of 20 existing Next Generation 737 orders into 737 Max 8 orders

With Boeing down from its recent high above $103, the market decline might present an opportunity for those interested in the firm. According to Yahoo Finance, the consensus of the analysts who track the firm has the stock at a buy and a mean price target of $114, 16% upside from current levels.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The author manages the SPADE Defense Index (DXS) which serves as the underlying index for the Powershares Aerospace & Defense ETF (NYSEARCA:PPA). Boeing is a constituent of the Index and is held in the fund.