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Boeing & Emirates Ink Deal Worth $8.8B for 30 787 Dreamliner

Zacks Equity Research

The Boeing Company BA has recently signed a contract with Emirates for delivering 30 787-9 Dreamliner airplanes to the Arabian airlines. The deal, valued at $8.8 billion at current list prices, got finalized at the ongoing Dubai Airshow.

Per the agreement, Emirates will update a portion of its large order book by exercising substitution rights and converting 30 777 airplanes into 30 787-9 Dreamliner. Earlier, the UAE-based airline giant signed an initial agreement for the larger 787-10 variant.

Demand for Boeing’s 787 Dreamliner at a High

The demand for Boeing’s Dreamliner continues to soar, as its superior fuel efficiency and range have enabled various airlines across the world to open 257 non-stop routes. Notably, more than 80 airline companies around the world have ordered more than 1,400 Dreamliner since the program's introduction, making it the fastest-selling widebody jet in history.

Moreover, Boeing Global Services has the world's largest supply chain that strongly prioritizes providing best-in- class services like timely replacement of parts, reducing maintenance times and offering overall aircraft maintenance. Similar services are offered for the Dreamliner. Thus, all the aforementioned factors make Boeing’s Dreamliner an eminent choice for airline companies.

To this end, we mention a few notable orders won by Boeing in recent times for the 787 Dreamliner. During September, Air New Zealand confirmed an order for eight Boeing 787-10 Dreamliner, valued at $2.7 billion. Further, in July, Korean Air approved a budget of $6.3 billion for the purchase of 10 787-9 and 10 787-10 Dreamliner planes.

What’s Ahead for Boeing?

Per Boeing’s current market outlook, the world will need 44,040 new planes, worth $6.8 trillion, between 2019 and 2038. The company expects widebody jets to significantly drive demand, reflecting 18.9% of the total demand projection. This translates into worldwide demand for 8,340 widebody jets, worth $2.65 trillion, over the next 20 years. Notably, as the 787 fleet comprises an integral part of the widebody jet space, we may expect Boeing to win more such orders, like the latest one, for this fleet in the days ahead.

Such projections should further bolster the company’s position in the commercial aerospace market, as prospects for twin-aisle jet planes seem impressive, with more airlines such as Emirates shifting to small and medium-sized widebody airplanes like Boeing’s 787 fleet.

Price Movement

Boeing’s stock has gained about 4.6% in the past three months compared with the industry’s growth of 1.1%.

Zacks Rank & Key Picks

Boeing currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space are Northrop Grumman NOC, L3Harris Technologies Inc LHX and Leidos Holdings LDOS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Northrop Grumman has recorded average positive earnings surprise of 11.48% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 3.8% to $20.38 in the past 90 days.

L3Harris Technologies has recorded average positive earnings surprise of 5.02% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 7.5% to $9.99 in the past 90 days.

Leidos Holdings has recorded average positive earnings surprise of 8.93% in the last four quarters. The Zacks Consensus Estimate for 2019 earnings has risen 5.1% to $4.96 in the past 60 days.

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