The 737 MAX fiasco has dampened Boeing’s (BA) narrow-body single-aisle jet orders. However, Boeing has continued to attract orders for its wide-body aircraft despite the MAX crisis, trade tensions, and global economic slowdown concerns.
From January through July, the aircraft manufacturer received 92 orders for its wide-body aircraft. The company’s 787 Dreamliner series plane received the most orders (50 units), while its 777 and 767 models received 32 and ten orders, respectively.
Airlines buying Boeing wide-body aircraft
During the Paris airshow in June, Korean Air placed the most orders for Boeing 787 series planes, committing to buy ten 787-9 planes and ten 787-10 planes. The deal is estimated to be worth $6.3 billion. Boeing is to deliver the aircraft between 2023 and 2027.
Boeing received another large order for 787 planes in mid-March, just a few days after the Ethiopian Airlines accident on March 10. German airline Lufthansa agreed to purchase 20 Boeing 787-9 Dreamliner planes. The deal is estimated to be worth $12 billion.
And in May, Boeing received orders for eight 787-10 model jets from Air New Zealand for a list price of $2.7 billion. The airline, a long-time Boeing customer, currently owns 130 Boeing 787-9 aircraft equipped with Rolls-Royce engines. However, as it is facing trouble with these engines, Air New Zealand wants the new 787-10 planes to be equipped with General Electric (GE) engines. Before the Ethiopian Airlines crash, Bamboo Airways signed orders for ten Boeing 787-9 Dreamliner planes, worth $3 billion in total, in February.
For its 777 series aircraft, Boeing received the largest order from International Airlines Group. The British Airways parent ordered 18 Boeing 777-9 jets in February, valued at $18.6 billion. Boeing has also received orders for five and six of its 777 Freighter jets from Qatar Airways and China Airlines, respectively. Furthermore, FedEx (FDX) has ordered six 767s, and United Parcel Service (UPS) has ordered four.
Boeing’s wide-body jet orders are a respite
Boeing desperately needed these wide-body aircraft deals, as orders for its narrow-body 737 MAX planes have dried up since mid-March. The 737 MAX planes accounted for nearly 70% of its overall commercial aircraft orders. Between January and July, Boeing’s firm orders stood at net negative 88 planes. Its orders were more than offset by the cancelation of India’s bankrupt Jet Airways’ order for 200 MAXs.
Furthermore, Boeing’s aircraft shipments have fallen as air carriers deny MAX deliveries, impacting its financials. In this year’s first seven months, the company’s overall commercial aircraft shipments fell 38% YoY (year-over-year) to 258 units.
In the second quarter, its overall deliveries plunged 54% YoY to 90 jets, resulting in its total revenue falling 35% YoY. The company recorded a net loss for the first time in the last 12 quarters.
The 737 MAX’s return to service is still uncertain. This delay has cost the company billions of dollars in compensation to MAX customers. On August 20, Reuters estimated that MAX fiasco costs had crossed $8 billion.
Therefore, the company’s wide-body aircraft orders are crucial in ensuring incremental revenue, earnings, and cash flow. Despite the ongoing MAX troubles, global airlines still rely on Boeing’s planes.
Boeing stock’s performance
Boeing stock has fallen significantly since the March 10 Ethiopian Airlines crash, by 14.1%. On March 8, Boeing was the top Dow 30 stock with a YTD (year-to-date) gain of 31%. However, as of September 6, the stock had fallen to $363, bringing its YTD gain down to 12.6%. It now places 19th among Dow 30 stocks.
This year, the iShares US Aerospace & Defense ETF (ITA) has outperformed Boeing, rising 29.8%. Meanwhile, the Dow Jones and S&P 500 are up 14.9% and 18.8%, respectively.