Boeing Benefits From Japanese Orders - Analyst Blog

A couple of big orders from Japanese airline operators boosted the order book of The Boeing Company BA. The combined value of the orders at list prices comes to a whopping $14.1 billion.

The larger order among the two, worth $13.1 billion came from Boeing's old Japanese customer All Nippon Airways (“ANA”). Notably, ANA is in a mission to expand its operational fleet and hence ordered 40 wide body airplanes to Boeing. The order includes 20 777-9X, 14 787-9 and 6 777-300ER (extended range) airplanes. ANA also ordered 30 airplanes from Boeing's international peer Airbus.  

Another order worth $1.3 billion came from Japan Transocean Air for 12 Next-Generation 737-800 airplanes.

The delivery of the above aircraft will begin from 2016 and are expected to be over by 2027. We believe the increase in airplane orders is linked with the expectation of higher air travel requirement during Japan Olympics 2020. In addition, modernization of the existing fleet is also behind the large order.

Boeing's airplanes are in demand globally due to their quality and efficiency compared to its peers' carriers. Through March 25, 2014, Boeing received net orders for 177 airplanes with the 737 variant contributing 171 of those airplanes. This fresh order will further swell the bulging order book of the company. Boeing exited 2013 with a backlog of 5,080 airplanes valued at a whopping $374 billion.

Boeing could safely fall back on contribution from its commercial airplane segment amid worries involving U.S. defense spending. The Commercial segment contributed 61.1% to the total revenue in 2013, which is higher than the 2012 contribution by nearly 100 basis points.

Boeing currently carries a Zacks Rank #3 (Hold). Some better-ranked aerospace and defense companies include General Dynamics Corp. GD, Lockheed Martin Corporation LMT and Northrop Grumman Corporation NOC. All these stocks presently have a Zacks Rank #2 (Buy).