The Boeing Company‘s (BA) plans to provide a new engine for its most successful airplane variant 737 has taken a back seat after the mega deal signed by its rival France based Airbus.
Recently, Airbus received an order from Indian low cost carrier IndiGo for 180 eco-efficient Airbus A320 aircraft of which 150 will be A320 neos and 30 will be A320s. This order is the single largest firm order for large commercial jets in aviation history. The deal is valued at $15.6 billion.
Airbus’s new airplanes will be supplied from 2016 and have more efficient engines and large wing tip devices called Sharklets, which will in turn lower the fuel consumption by 15% from the present levels and also reduce green house gas emission.
For the first eleven months of 2010, out of 388 net orders received by Airbus, 160 orders are for A-320, while out of the 530 net orders received by Boeing in 2010, 486 orders are for 737, making Airbus A-320 and Boeing 737 the largest revenue generators for these companies for their commercial businesses.
To cope with increasing demand for Next-Generation 737 Boeing increased the production rate of this variant thrice during 2010, with the present production goal standing at 38 airplanes per month effective second quarter 2013. However, Airbus’s mega order win has created a dilemma for Boeing about developing a new engine for its 737 or making a new replacement airplane.
The beginning of 2011 might not be great for Boeing’s commercial airplane business but the company ended 2010 on a high note by delivering 462 commercial airplanes in the fiscal year surpassing its year-end delivery target for 2010 by two airplanes. Boeing ended the year with a strong backlog of 3,443 commercial airplanes.
Airbus’s mega deal win is surely a loss for Boeing, but we believe the mega deal for the commercial jets is a clear indication of positive movement in the commercial aerospace.
The Boeing Company currently retains a Zacks #4 Rank (short-term Sell rating). The company competes with the likes of General Dynamics Corp. (GD), Lockheed Martin Corporation (LMT) and Northrop Grumman Corporation (NOC).
Based in Chicago, The Boeing Company designs and produces commercial airplanes, defense systems and civil and defense space systems.
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