Boeing Co. (BA), Pacing Record Orders in 2011

Boeing has been busy lately. With global increases in air travel and international cargo shipments, record flight figures is expected for the next decade and beyond, new orders and contracts have the Company's production facilities and operational capacities fully booked. World air transportation traffic is forecasted to double or triple by 2025 (1), and many commercial and cargo carriers have placed orders for new planes to increase the number of flights and overall capacities to accommodate the increasing demand for air travel and cargo shipments.

Airbus, the European-based aircraft manufacturing "powerhouse," has had its share of troubles in 2011. The Company says "Mideast Unrest May Wipe Out 40% of Projected Orders." (2) These unfortunate chain of events, coupled with  the financial crisis within the European Community, has disrupted Airbus' operations. Boeing, meanwhile, has made strategic competitive moves to seize a larger share of the international market in 2011 while the European Behemoth is experiencing this unforeseen setback. Boeing's orders are piling up in 2011, and we have just entered April. In addition to the new orders that Boeing has received in the 1st Quarter, the Company has been able to land multiple Defense-type orders from the US., as well as international players in the Defense market.  

Boeing Defense, Space and Security President says that he plans to boost sales and revenue in the international market in case the US. Defense budget tightens in the future. However, the US Department of Defense did very well by receiving some impressive appropriations. Finally, after an ongoing vacillating engagement between the Republicans and Democrats over the Federal Budget, both sides managed to arrive to an amicable accord one hour prior to the deadline. The Pentagon received a "better than expected" (about $5 Billion more) amount of appropriated funds. The Army is to receive approximately $33.3 Billion, not including additional transfers of funds, for its operation and maintenance. The Navy received $37.8 Billion. The Air Force, was allotted $36 Billion. And the Department of Defense was awarded $30.2 Billion. There were other allocations as well to the remaining Departments and purposes. (3). These amounts do not include funds that are to be provided for various projects that include the purchase of equipment, supplies and other expenses incurred during the fulfillment of said projects. Boeing has already begun to win US. Military contracts in the building of planes, helicopters, satellites, etc., and providing many services for the Department of Defense and the US. Military. Boeing has been spared a government "shutdown" that would have caused many problems for the Company, especially with its' pending orders from the Pentagon. Moreover, Boeing looks to gain on its domestic competitors as well in the Defense Sector, securing various contracts and orders with the Department of Defense.
 
In 2011, after winning a $35 Billion Dollar contract in February to be the chosen one to build the next generation of refueling tankers (a military version of the Boeing 767) for the US. Airforce, Boeing landed yet another contract this time with the US. Navy on Monday, the 11th of April. This $7.3 Million Dollar deal is "for supplies and services to support the F/A-18E/F Structures Service Life Assessment Program." (4).

Some US. and International carriers are adding the "New Generation" 737s. Although some of these orders have estimated completion dates from mid 2011 to well into 2012, Boeing has been delivering these units since January 2011. According to "The News Tribune" article published April 8th, 2011, Boeing has delivered 104 jetliners in the 1st Quarter this year, the company reported Thursday the 7th of April, 2011.  Also, as of March 31st, 2011, Boeing has received an unprecedented 305 orders, from the CIT Group Inc., and other companies, for the new 737s, which will feature "a new 737 Boeing Sky Interior and will come equipped with the latest aerodynamic and engine changes, reducing fuel consumption further by 2%." (5). Other model sales have increased as well in 2011, adding to an incredible 1st Quarter start. Delta Airlines (DAL), is rumored to be in the market for approximately 200 narrow-body jets, eclipsing the largest order of commercial jetliners ever recorded of 180 units sold by Airbus to IndiGo, India's largest low cost carrier.(6) Delta is also looking at placing another 200 plane order as it replaces its older planes.(7) Boeing will win these orders. Boeing will never let an international competitor beat it on its home turf, especially for possibly the world's largest single order in the history of aviation possibly valued at over $32 Billion dollars. The Atlanta-based and world's second-largest carrier, Delta Airlines will most likely choose the US. Maker over the foreign manufacturer. Boeing's "new generation" planes are more technologically advanced, environmentally friendlier, more fuel efficient than the similar models of its' international rival Airbus.(8)

"Today, Boeing jets are a mainstay in China's air travel and cargo system, representing more than 50% of all commercial jetliners operating in China. Over the next 20 years, Boeing projects that China will need 4,330 new aircraft, worth more than $480 Billion dollars." (9)

Recently, Boeing has also returned to the communication satellite market. The previous venture was poorly managed and ineffective, however, this move by Boeing's Satellite Division has come at an opportune time. Boeing will be the only major player in this market, as every other competitor has left the sector and disregarded its great revenue producing potential.(10)  

Boeing has captured a lot of interest as of late. This interest has come from big players. The Company's recent moves towards its 52-week high, set a little under a year ago, demonstrates the "play" that the stock is receiving since January. Boeing deserves a major consideration as a profitable investment for this year and years to come. 1st Quarter Earnings for Boeing, announced April 18th, should be significantly better than what are expected. All in all a solid stock pick!! Recent attempts to stifle Boeing's momentum, JP Morgan's earnings estimate adjustment March 30, and Nomura's "Reducing" statement, shall be disregarded by investors as the Stock will continue to climb. Boeing's excellent products, innovation, competitive edge, the pace to set a record number of orders in 2011, and the Company's profitability, will be the determining factor in the Stock's performance.  

Great profits to all,

Jeff the Genius

(1). SOURCE, "Met Office to triple its Computing Power." by Richard Thurston in ZD NET April 28th, 2010.

(2). SOURCE, "Airbus Says Mideast Unrest May Wipe Out 40% of Orders There",
By Tamara Walid, April 11th, 2011, Bloomberg.

(3). SOURCE, "Department of Defense 5 and Full-Year Continuing Appropriations Act, 2011."

(4). SOURCE, "Boeing Grabs New Navy Work" by John Adams, Govcon Wire April 11, 2011.

(5). SOURCE, PRNewswire---April 12, 2011 and The Boeing Company

(6). SOURCE, "Air News on Airbus, Boeing In Race for World's Largest Single Order.....,"  Wings Over Africa Aviation Limited, April 13, 2011.

(7). SOURCE, "Air News on Airbus, Boeing In Race for World's Largest Single Order.....," Report by US Editor Ed Hirsc, Wings Over Africa Aviation Limited, April 13, 2011.

(8). SOURCE, PRNewswire---April 12, 2011 and The Boeing Company

(9). SOURCE, "Air News on Airbus, Boeing In Race for World's Largest Single Order.....,"  Wings Over Africa Aviation Limited, April 13, 2011.

(10). SOURCE, BOEING.




Disclosure: I am long BA.

Additional disclosure: I have some May 75 calls