The Boeing Company (BA) has paired up with Vietnam Airlines for its interior upgrade program. The company introduced the latest cabin interior modernization on four of the airlines’ 777-200ERs.
Boeing Commercial Aviation Services has developed a cabin layout, satisfying the needs of both Vietnam Airlines and its passengers. The Boeing unit is also responsible for providing engineering services and integrating the program. Boeing will also administer the worldwide group of suppliers that Vietnam Airlines has selected for the program.
The refurbishing program includes the relocation of business class seats; installation of new deluxe economy and economy class passenger seats; and revisions to the in-flight entertainment system, and in-seat power and cabin cooling systems. Besides, the company also relocated and updated lavatories, galleys, ceilings, sidewalls, lighting, plumbing and the lower lobe attendant crew rest modules as per upgrade guidelines.
Complementing these commercial orders, Boeing continues to receive contracts from the Department of Defense. The U.S. Air Force awarded a contract worth $26 million to the company to provide a leased aircraft. The Wright-Patterson Air Force Base in Ohio awarded the contract for 737-C40C.
Continued contract wins helped the company to end the second quarter 2010 with a backlog of $312.3 billion.
During the second quarter conference call, Boeing provided its revenue guidance for fiscal 2010 in a range of $64 billion to $66 billion. The company also provided earnings per share guidance in the range of $3.50 to $3.80 for full year 2010.
The Zacks Consensus Estimate for third-quarter 2010 earnings is $1.03 per share. For full year 2010 and 2011, the Zacks Consensus Estimates are, respectively, $3.92 per share and $4.93 per share.
A major portion of Boeing’s revenue is contingent on the U.S. budget. Almost 50% of the company’s revenue comes from defense contracts, which will receive a blow if the proposed reduction of U.S. defense expenditure by $100 billion is carried out over the next five years. We thus maintain our Neutral recommendation on Boeing. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.
The Boeing Company, with its headquarters in Chicago, designs and produces commercial airplanes (787, 737, 747, 767, 777), defense systems and civil and defense space systems. It is also the largest contractor for NASA (National Aeronautics and Space Administration). Its competitors include Lockheed Martin Corporation (LMT) and Northrop Grumman Corporation (NOC).
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