Boeing Books '787 Order from Russia - Analyst Blog

Zacks Investment Research
Posted: Apr 10, 2012 2:45 PM
Boeing Books '787 Order from Russia - Analyst Blog

The Boeing Company (BA) has signed an agreement with the Russian airlines, Transaero, for four 787-8 Dreamliners valued at $744 million at list prices.

Primarily composed of composite materials, The Boeing Company’s 787 is the first mid-size airplane that is capable of flying long-range routes. Its supreme fuel efficiency renders exceptional environmental performance. It uses less than 20% fuel in comparison to other similarly sized airplanes, but travels at a similar speed as the fastest wide bodies. 

The aircraft is simpler in comparison to airplanes of its category and offers increased functionality and efficiency.  New engines from General Electric Company (GE) and Rolls-Royce are used on the 787. The 787-8 Dreamliner can carry 210 - 250 passengers on routes of 7,650 to 8,200 nautical miles.

Boeing is well positioned as the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries. Besides, it is one of the leading global aerospace and defense contractors.  In March 2012, the company received an order from Air Astana for four 767-300 Extended Range and three 787-8s valued at $1.3 billion at current list prices.

The company recently announced deliveries across its commercial and defense operations for the first quarter of 2012. In the commercial space, the airliner delivered 137 airplanes during the first quarter of 2012. During the quarter, the company has delivered five 787’s. Currently, more than 850 787 aircrafts are on order by 59 customers.

At its fourth-quarter earnings call, the company had announced that in 2012, it expects deliveries from Commercial Airplanes to be between 585 and 600 airplanes which include an expected 70 to 85 787 and 747-8 deliveries.

We believe that Boeing is among the best-positioned companies in the sector due to its balanced exposure to commercial aircraft and defense equipment. The U.S. defense budget is also skewed towards a number of prominent Boeing programs. Going forward, we believe that the planned production rate increases, stable cash flow generation and its globally-diversified customer base will help to maintain the growth momentum.

However, these positives are offset by the headwinds threatening the global airline industry along with expected cutbacks in the U.S. defense budget. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Based in Chicago, Boeing Company is a premier jet aircraft manufacturer. The company’s customers include domestic and foreign airlines, the U.S. Department of Defense, the Department of Homeland Security, the National Aeronautics and Space Administration, other aerospace prime contractors, and certain U.S. government and commercial communications customers.

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