Boeing firing on all cylinders

Kate Leaman Kate Leaman

28 February 2019

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It’s been a couple of really good weeks for Boeing, inking major deals in Southeast Asia. One of the latest features Vietnam’s Bamboo Airways, as they plan to order around 25 narrow and wide bodied Boeing aircraft this year. This is Vietnam’s newest carrier, and it is set to prepare four flights to both the United States and Europe, facilitating the need for larger aircraft.

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This deal will increase the Bamboo Airways Boeing fleet to a total of 55. A Bamboo Airways representative chose not to comment on the potential agreement, as the negotiations are still underway as to the exact cost of the order. The initial order that was signed on Wednesday featured Bamboo buying 10 Boeing 787-9 Dreamliners, at the value of around $3 billion. In June it had agreed to supplying 20 of the same aircraft with a  price of $5.6 billion before volume discounts.

Not to be outdone in Asia, Boeing looks likely to land a lucrative British Airways deal very soon as well. This is a huge victory for Boeing over rival Airbus, as British airways looks to replace its aging long haul fleet. IAG SA, the parent company of British Airways will order as many as 42 Boeing 777 jets with a value up to 18.6 billion, which includes 17 of the largest version, the 777-9 wide bodied jet, as well as taking options on a further 24 of the same aircraft.

 The battle between Boeing and Airbus

There had been quite a battle between Boeing and Airbus to land this huge deal. British Airways is looking to replace its aging 747s, a total of 34 by early 2024. Airbus had pitched the idea of the A350-1000, which British Airways had already purchased in order to meet a necessity to fulfill some of that order. However, in the end Boeing one the larger portion of the contract, giving it a leg up.

This was after analysts had suggested that perhaps the program for the re-winged 777 model were an unprofitable size, as it seats over 400 people, and sales had sputtered a bit after an a busy sales boost at first. Clearly, the 777 revamp seems to be working out quite well for Boeing, who has been running strong for some time. The price has certainly been shown reactive to the fundamentals in this company, which have surged since the major crash that we had seen across US stocks in December. In fact, once Boeing hit $300, buyer stepped in and have since driven the price up to $435 in just three short months. While being a bit parabolic, the fundamentals are very strong for Boeing, and analyst across Wall Street continues to give it high marks. With a buy rating from several of the largest firms on the street, it makes sense that value hunters will continue to come in and pick this stock out.

Currently, it looks as if there will be significant support near the $375 level, with analysts projecting a target of near $600 in some cases. Boeing is clearly best in class, and therefore one of our favorites when it comes to the transportation sector.


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