When it comes to the aerospace sector, retail investors can expect a duopoly in the civilian aircraft manufacturing space. Boeing is the oldest and arguably the most historic company to occupy this space. However, the dearth of solid facts or a steady line of innovative products might make some investors think that this is not an exciting space to invest into.
However, this isn’t necessarily the case. In this article, we go over the latest fundamental growth factors that will shape Boeing’s future as it continues to grow.
Spreading Its Wings
Boeing finds itself at a crossroads today: production of its vaunted 737 Max – which sold for between $100-135 million apiece in 2020 – remain paused for the 20th consecutive month after airlines operating the MAX variants grounded most of them following two fatal crashes. The root cause has been determined to be electrical problems that require extensive retrofits be made. On the other hand, the Max’s wide-body counterpart, the 787 Dreamliner – which sold for between $240-300 million apiece in 2020 – resumed deliveries in March this year, following a 5-month pause due to a different manufacturing flaw.
Until the Max’s production hit the roadmap, a number of airlines in Europe – which traditionally favour Airbus over Boeing – had been positively inclined towards acquiring Boeing’s narrow-body Max. With the pandemic grinding international travel to a shadow of its former self, both Boeing and Airbus have witnessed outright cancellation or downgrading of placed “confirmed” orders into “options” (a right to buy in the future but not an obligation).
In terms of products, the Max has a range of 6,000-7,000 kilometres while the Dreamliner has a range of 13,000-14,500 kilometres. Problems with the Max have created opportunities for the Airbus A321 family of jets to take orders away from Boeing. U.S.-based JetBlue chose the latter for its short-distance transatlantic service. American Airlines and United Airlines – two of the largest customers Boeing had serviced in its past – have also ordered Airbus aircraft to modernise their fleets.
Boeing’s signature wide-body 777 family – with a range of 15,000-17,000 kilometres, is the most-produced Boeing wide-body passenger jet in its history. Its latest variant, the 777X, has been suffering from lack of orders and cost overruns after Lufthansa, Emirates, Qatar Airways, and Etihad Airways formally committed to buying this latest variant. On May 17 of this year, Emirates expressed its desire to convert at least a portion of its order from the 777X to the cheaper and smaller Dreamliner instead. </p.
Boeing has 4,045 planes on backorder, close to 3,200 of them for Max jets and 433 for Dreamliners as of the end of April. However, it is currently dwarfed by the number of deliveries placed by Airbus:
