The Boeing Company (BA) announced that it received an order from Copa Airlines to deliver 22 Next Generation 737-800’s. The value of these 22 airplanes is $1.7 billion at Boeing’s list price. The order has an additional clause for 10 options, which, if exercised, will increase the order size to 32 airplanes and will cost $2.6 billion at list price. The airplanes are expected to be delivered between 2015 and 2018.
Boeing had earlier received orders for its Next Generation 737-800 from Copa Airlines in the past. In the last two years, the airline has purchased 37 new Next-Generation 737-800’s from Boeing and entered into lease agreement for another 10 aircraft. The airline is estimated to take delivery of another 68 airplanes over the next seven years.
The Next Generation 737-800 airplanes to be bought by Copa Airlines will have new extended features, like sculpted sidewalls and window reveals that will improve upon the flying experience. Additionally, the new airframe and engine improvements will make the 737-800 airplane more fuel efficient reducing the fuel consumption by 2% from present levels.
The Next-Generation 737 airplanes from Boeing are in demand in the market and, to cope with the anticipated higher demand, the company has increased the production rate of this airplane twice in the recent past. Boeing aims to churn out 38 airplanes per month from the second quarter of 2013.
As of November 23, 2010, net orders received by Boeing for 737 stands at 435 airplanes. The delivery of Next-Generation 737 through the first nine months of the year touched 316 airplanes, marking the highest selling model by the company.
Top-line contribution from Boeing’s Commercial Airplane segment rose 11% year over year during the third quarter. Net orders booked were 221 airplanes. Boeing expects to deliver 460 commercial airplanes to its consumers in 2010, with the revenue expected to be $31.5 billion.
The delay in delivery of Boeing’s first 787 airplanes remains a cause for concern; however, the company ended the third quarter with a strong contractual backlog for its commercial airplane business. The backlog at the end of third quarter 2010 was 3,401 airplanes, which is valued at $255 billion.
The Boeing Company currently retains a Zacks #3 Rank (short-term Hold rating).
Based in Panama, Copa Airlines is one of the fastest growing airlines in the industry. Copa’s efficient fleet and strategic position enable the airline to grow in the Latin American market.
Based in Chicago, Boeing Company designs and produces commercial airplanes, defense systems and civil and defense space systems. The major competitors of the company are General Dynamics Corp. (GD), Lockheed Martin Corporation (LMT) and Northrop Grumman Corporation (NOC).
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