Boeing Hikes Jet Prices

May 30, 2017 11:56 AM ETThe Boeing Company (BA)5 Comments

Summary

  • Boeing hikes list prices by 2.2%.
  • Increase shows confidence in aircraft market.
  • Price increases mostly reflect inflation rate.

Last year a pause in Boeing’s (NYSE:BA) catalog value increases for its commercial aircraft was widely reported as some of Boeing’s commercial programs were in a rather uncomfortable position where the production either needed to be cut or there was the possibility that the program even needed to be halted and order inflow dwindled as oil prices collapsed in combination with overcapacity on the wide body market. So, there was a bit of negativity regarding Boeing and media were quite fast to pick up the price freeze for at least one year to complete the challenging picture for The Boeing Company. What went somewhat unnoticed is the fact that Boeing increased list prices in April this year.

Source: www.boeing.com

Catalog versus list

Aircraft pricing is always a sensitive subject, not only for airlines and jet makers but also for investors. The pricing and contract values are considered proprietary for obvious reasons and that creates a bit of fog around the actual pricing.

The truth is that no company is paying list prices and discounts could easily be higher than 50%. Some useful information about aircraft pricing can be read in one of my previous articles “The Myths About Aircraft Prices”.

2017 List Prices

In April, Boeing hiked the list prices of its products somewhat. The 2017 list prices in $ millions are shown below versus their 2016 list prices:

The list price hikes are important, since it gives an idea of how much the pricing after discount can increase. For the smallest Boeing aircraft, the list price increased by $1.8 million, while the Boeing 777-9 price tag was seen increasing by $8.8 million.

Investors should be aware that increases in pricing does not mean that the bottom line will increase. The hikes usually account for changes in labor costs, material costs and

This article was written by

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