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How Have Boeing’s Key Indicators Performed in 1Q16?

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Apr. 20 2016, Published 11:10 a.m. ET

Aircraft deliveries

For the first quarter of 2016, Boeing (BA) delivered 176 aircraft, 4% less than the 184 aircraft delivered in 1Q15. It delivered 131 737s, followed by 30 Dreamliner 787s, 24 777s, one 767, and one 747.

Despite a slowdown, Boeing’s deliveries are higher than rival Airbus in the same period. Airbus delivered only 125 aircraft in 1Q16. An engine issue on its new Airbus 320neo caused the delay in deliveries.

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Order book

Airbus leads Boeing on the order front. As of March 31, 2016, Airbus’s order backlog stood at 6,716 aircraft versus Boeing’s 5,740. This huge order backlog means assured work for vendors such as Spirit AeroSystems (SPR), United Technologies (UTX), and Honeywell International (HON).

For the quarter, Boeing’s net orders stood at 130 aircraft, while Airbus booked only ten. However, Airbus did manage to seal a deal for 118 aircraft with Iran Air, one of Boeing’s prime clients. However, there was little that Boeing could do, given the long-standing economic sanctions imposed on Iran. The sanctions have been lifted and Boeing is already in talks with Iran, which is expected to place orders for 400–500 aircraft in the next ten years.

What to expect

For the next year, Boeing expects to see healthy order activity as airlines continue to restructure their fleets amid lower oil prices. The deferral requests and cancellations are also expected to remain lower and the company expects a combination of growth and replacement to drive the need for 38,000 aircraft over the next 20 years.

Although order backlog is an important indicator, a higher delivery rate works in favor of Boeing’s investors, as deliveries translate to cash flows.

Boeing (BA) forms ~9% of the iShares US Aerospace & Defense ETF (ITA).

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