Boeing More Than Triples Plane Orders, Beats Delivery Goal by Two Aircraft
Stock Chart for Boeing Co/The (BA)
Boeing Co. sold more than three times as many commercial airplanes in 2010 as the year before and beat its delivery target as air-travel demand recovered from the global economic crisis.
A surge in sales of the 737 resulted in 530 net orders, stripping out 95 cancellations, the Chicago-based company said in a statement today. That’s valued at about $49.5 billion at average list prices and compares with 142 orders in 2009. Boeing delivered 462 aircraft, surpassing its target of 460, after handing over 481 in 2009 when it was catching up from a strike the year before. Deliveries are important because that’s when airlines make the bulk of their payments.
“Airlines focus first on domestic and regional routes when they come out of a downturn,” leading to “strong orders and record deliveries” for the 737 single-aisle jet, Randy Tinseth, marketing chief at Boeing’s Commercial Airplanes unit, said in an interview today. “Also, leasing companies hadn’t ordered for a number of years, so their backlogs were down and it was time for them to restock their pantries.”
Boeing and larger rival Airbus SAS are boosting production this year to accommodate orders from airlines and lessors, refreshing their fleets with more fuel-efficient jets, especially for the single-aisle planes. The planemakers scaled back when demand dropped to the lowest in 15 years in 2009 as carriers’ ticket sales dried up during the recession.
Top Delivery Spot
Boeing climbed $1.32, or 2 percent, to $68.80 at 4:15 p.m. in New York Stock Exchange composite trading. The gain was the second largest today among the 30 companies in the Dow Jones Industrial Average.
Airbus, the world’s biggest commercial-jet builder after holding the lead in deliveries every year since 2003, hasn’t yet released December figures. The Toulouse, France-based company won 388 orders through November and delivered 461 jets.
Boeing Commercial Airplanes President Jim Albaugh has said he aims to recapture the top delivery spot this year, as the new 787 Dreamliner model is set to enter service. The U.S. company plans to give its 2011 forecast when it releases fourth-quarter earnings on Jan. 26. Tinseth said the growth trend for orders will continue, as passenger and cargo traffic rebounds and emerging economies expand.
“If fuel prices continue to be manageable, we could be seeing an extended period of profitability for our customers,” he said. The International Air Transport Association predicted that global carriers earned a record $15 billion last year.
Sales in 2010
Airbus has also led Boeing in orders since 2008. Both planemakers are working on replacement models for their popular narrow-body aircraft that could be available next decade. Airbus said last month it would offer a new, more fuel-efficient engine for its A320 in the meantime, available in 2016.
Boeing is still considering its options and will decide this year whether to follow suit or wait until it can unveil a whole new narrow-body airplane, Tinseth said today. Boeing had 486 net orders for the 737 in 2010.
“It’s clear airlines want us to continue to improve the product,” he said. “We’ve had mixed reaction from our customers on re-engineing the airplane, but they all have said that a new airplane that meets the requirements is interesting to them.”
Boeing handed over 376 of its 737 single-aisle model as well as 12 of the twin-aisle 767 and 74 of its most profitable jet, the 777. In the fourth quarter, 116 aircraft were shipped to customers. The figures didn’t include shipments of the company’s two delayed development programs, the 787 Dreamliner and the 747-8 jumbo jet, both of which were pushed back to this year and ended 2010 with fewer orders, due to cancellations.
The delays to the freighter version of the 747-8, now a year and a half behind schedule and not due to enter service until mid-2011, prompted Guggenheim Aviation Partners LLC to cancel its order last week, said Steve Rimmer, chief executive officer of the Issaquah, Washington-based leasing firm.
Boeing is still working on a new schedule for the 787, which suffered a seventh delay after an electrical fire broke out on a test jet in November and prompted a six-week grounding of the fleet. Engineers are redesigning some parts.
“It’s just a lot of work when you have to go through the rescheduling of all the deliveries and understanding what needs to be done, and when certification testing will begin again,” Tinseth said. “It’s not an easy process, and we have to work through it in a very methodical and thoughtful manner.”
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