Will Boeing Better Last Year's Commercial Airplane Orders?

Commercial aerospace behemoth The Boeing Company BA received a confirmation from Kuwait Airways for 10 777-300ERs (Extended Range), valued at $3.3 billion at list prices. Boeing's airplanes are in demand due to its fuel efficiency and comfortable interiors. The ability to carry more passengers and fly extra nautical miles as compared to its peers makes these airplanes customer friendly.

Boeing completed 2013 with net orders of 1,355 airplanes, a 12.6% improvement from 2012.  The company is on course to match 2013 order levels this year. Boeing updated its order book till Dec 16, 2014, which stood at 1,317 airplanes. The recent orders from Kuwait Airways take the tally to 1,327 airplanes. With another week to go before we draw the curtain on 2014, Boeing still has the opportunity to surpass the 2013 net order level.

Boeing's international peer and archrival Airbus provided details from its order book until Nov 2014. Net orders of this European airplane manufacturer stood at 1,031 airplanes. The backlog at the end of November was more than 6,000 airplanes, while the company exited the third quarter with a backlog of 5,500 airplanes.

The improvement in backlog of the two major aircraft manufacturers indicates a boom in air travel. Boeing's long-term outlook in the commercial space indicates that demand for aircraft will increase by more than 100% in 2033 from 2013 levels. Boeing projects that 42% of this rise will be additions to replace an older fleet while the balance will be for new airplanes.

Given the expected improvement in air traffic and demand for airplanes, the Chinese government has taken an initiative to build indigenous commercial aircraft to lower its dependence on Boeing and Airbus in the Chinese aviation market. Commercial Aircraft Corporation of China, Ltd, or Comac, is a state-owned company entrusted with implementing aircraft programs and spearheading the industrialization of civil aircraft market in China.

Per the Boeing report, air traffic is expected to grow 5% and cargo traffic to rise 4.7% annually in the next two decades. We believe that the surging global airplane demand is strong enough to accommodate both Boeing and Airbus along with Embraer SA ERJ and other fledglings like Comac.

Boeing currently has a Zacks Rank #2 (Buy). Other  well-ranked stock in the space are Spirit AeroSystems Holdings, Inc. SPR and Hexcel Corp. HXL.  Sprit AeroSystems Holdings sports a Zacks Rank#1( Strong Buy) and Hexcel Corp. has a Zacks Rank#2.