New orders for Dreamliner
The second day of the Paris Air Show was eventful for the Boeing Company (BA), as it received major orders for its wide-body Dreamliner aircraft. Korean Air Lines committed to the purchase of 20 Boeing Dreamliner series planes split evenly between the 787-9 and 787-10 models.
The planes are expected to be delivered between 2023 and 2027. The transaction is estimated to be worth $6.3 billion at list price. As part of the agreement, Korean Air Lines will lease another ten 787-10 model Dreamliner planes from Air Lease Corporation (AL).
Air Lease has entered into a separate agreement with Boeing to buy five 787-9 aircraft valued at $1.5 billion at list price.
Boeing’s 787 Dreamliner series are wide-body twin-aisle engine aircraft. Boeing claims that its Dreamliner models are 20%–25% more fuel efficient than its 767 series planes. The company has several variants of the Dreamliner series, with seating capacities ranging from 242 to 440 in the three-class seating category.
Boeing won 28 net firm orders for its 787 Dreamliner planes in the first five months of 2019. In mid-March, the company signed an agreement with German airline Lufthansa to sell 20 787-9 model Dreamliner jets valued at $12 billion at list price. Later, in May, the aircraft manufacturer received orders from Air New Zealand for eight Boeing 787-10 Dreamliner jets with General Electric (GE) engines. The deal is valued at $2.7 billion at list price.
Air New Zealand already owns 130 Boeing 787-9 Dreamliner aircraft, which have Rolls-Royce Holdings engines. However, the company is facing trouble with the Rolls-Royce engines, so it’s demanded GE engines for its new orders.
Boeing stock has underperformed its peers YTD (year-to-date). The stock has gained 16% YTD, while its competitors United Technologies (UTX), Lockheed Martin (LMT), and L3 Technologies (LLL) have returned 18.9%, 35%, and 46.4%, respectively, YTD.
The stock has also underperformed the iShares US Aerospace & Defense ETF (ITA), which invests in companies engaged in the manufacturing, assembly, and distribution of aerospace and defense equipment. The ETF has returned 22.5% YTD.