Boeing (BA) To Deliver 787 Dreamliners To Hawaiian Airlines

The Boeing Company (NYSE:BA) received orders from Hawaiian Airlines, a business unit of Hawaiian Holdings, Inc. (NASDAQ:HA) for 10 787 Dreamliners. The cost of 787-9 planes per list price is $2.82 billion. The order size might increase as Hawaiian Airlines has the right to purchase another 10 787 aeroplane.

Hawaiian Airlines has opted for the fuel-efficient 787 Dreamliner as its flagship airplane for medium to long-haul flights.

787 Dreamliner

Boeing’s 787-9 Dreamliner is one of the latest models of the company’s super-efficient 787 jets, offering more seats and cargo capability than its previous versions. With the fuselage stretched by 6 meters (20 feet) over the 787-8 model, the 787-9 comes with 20% less fuel use and 20% lower emission than other aircraft of similar size.

Leveraging the visionary design of the 787-8, the 787-9 jet promises to offer passenger-pleasing features such as large windows, large stow bins, modern LED lighting, higher humidity, a lower cabin altitude, cleaner air and a smoother ride.

Backlog

Backlog at the end of 2017 was up to $488.1 billion from $473.5 billion at the end of 2016-end. Reported backlog included $40 billion of net orders during 2017.

Due to the high credentials of Boeing’s products, customers are willing to wait for long periods for its jets.

Bigger Picture

In June 2017, Boeing raised its 20-year forecast for jetliner demand by 3.6%. Per the current outlook, the world will need 41,030 new planes, worth $6.1 trillion, between 2017 and 2036. Notably, while single- aisle jets are expected to be the major demand driver, their twin-aisle counterparts are also likely to gain solid traction.

In this context, Boeing projects demand for new twin-aisle planes in the 2017-2036 period to be 9,130. The company estimates that the total value of all wide-body planes (comprising small, medium and large) sold over the period will be $2.8 trillion compared with $3.2 trillion for the narrow-body variety.

Thus, prospects for twin-aisle jet planes seems impressive, with more airlines shifting to small and medium/large wide-body airplanes like Boeing’s 787 fleets. The company’s latest deal with Hawaiian Airlines is one such example.

Also, in the fourth quarter of 2017, the company’s Commercial Airplane Segment, that includes the 787 airplanes, saw an 8% rise in revenues to $15.47 billion. Boeing remains focused on improving 787 cash generation driven by favorable delivery mix, supplier step down pricing and efforts to drive internal productivity and first-time quality.

Price Movement

Boeing’s stock has rallied about 91.7 % in a year, compared with the broader industry’s gain of 47%. The outperformance was primarily led by significant demand for its military jets along with robust worldwide demand for its commercial aircraft.

Zacks Rank & Other Key Picks

Boeing sports a Zacks Rank #1 (Strong Buy).

A few other-top ranked stocks in the same sector are Huntington Ingalls (NYSE:HII) and Spirit Aerosystems (NYSE:SPR) , each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls recorded an average positive earnings surprise of 3.85% in the last four quarters. The Zacks Consensus Estimate for first-quarter 2018 earnings has risen by 43.75% to $17.38 in the last 90 days.

Spirit Aerosystems has an average positive earnings surprise of 9.76% for the last four quarters. The Zacks Consensus Estimate for first-quarter 2018 earnings rose by 14.96% to $6.30 in the last 90 days.

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