International aerospace giant The Boeing Co. (BA) announced that it received orders for ten 777-300 extended range (ER) from GE Capital Aviation Services (“GECAS”), the aviation unit of General Electric Co. (GE). The total cost of the airplanes is $2.8 billion at list prices.
Boeing’s 777 model is one of the most successful twin-engine airplanes. The 777-300 ER adds more variety to the existing 777 family. The 777-300 model is 19% lighter than its closest peer resulting in higher fuel efficiency and can carry 365 passengers for 7,930 nautical miles (14,685 km).
This Triple Seven variant is preferred by consumers as it releases 22% less green house gas per seat and the operating cost is 20% lower per seat versus its peers. The unit of GE has to date ordered for 53 of Boeing’s 777s out of which 41 are 777-300 ER’s.
Out of the net orders for Boeing’s existing commercial airplanes, the 777 model stands second in race for bookings as on March 21, 2011. The 737 model is leading the pack with net orders for 46 airplanes, while 777 is second with 33 airplanes.
Other than receiving orders for the commercial airplane version of 777, the company is also getting orders for the freighter version of 777. Recently, Boeing received an order from FedEx Corporation (FDX) to supply four 777 freighter jets with an average list price of $269.1 million per plane, amounting to $1.08 billion for the total order.
Besides securing new orders for the new 777 commercial airplanes, Boeing is also signing up agreements with airline operators for 777 Performance Improvement Package. This package helps to improve the fuel efficiency of the airplanes. The company has already received orders from 18 airlines, encompassing 500 airplanes, for the said program.
We believe the commercial airplane market is showing a gradual sign of improvement. Boeing’s net order booking of 76 airplanes till March 21, 2011 and delivery of 61 airplanes through February 2011 stand testimony to an eventual commercial airplane market recovery. Having said that, 787 Dreamliner continues to remain a cause of concern for the company as consumers have cancelled orders for 12 airplanes until March 21, 2011.
Chicago-based Boeing Co. currently has a Zacks #3 Rank (short-term Hold rating). We also maintain a long-term Neutral rating on the stock.
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