Is Boeing Setting Up For A Rebound?

Boeing (NYSE:BA) has been hurt significantly over the last year on a dismal commercial aircraft market. The company struggled to keep investors happy as both the top and bottom lines suffered on notably lower aircraft orders. The weak economy forced air carriers and governments to delay or cancel orders for new aircraft, while being forced to fly airliners built more than 20 to 30 years ago after being refurbished multiple times.

Historically, orders from airlines have been cyclical in nature and it appeared as though the market was going through a sustained slump. That said, the sheer number of orders received at the Dubai Airshow may indicate that things have turned for the better.

On the first day itself, Boeing managed to seal a $15.1 billion deal with Emirates Airlines for forty 787-10 Dreamliners. However, this deal only marked the beginning of a very successful week. On Day 2, the company clinched an even bigger deal worth $27 billion for delivering 225 737 MAX airplanes to flydubai airlines, representing the largest single aisle jet order for Boeing from a Middle East carrier ever.

Apart from the aforementioned orders, Boeing managed to secure an order from the Kuwait based ALAFCO Aviation Lease and Finance Company for supplying 20 additional 737 MAX 8 jets, valued at over $2 billion. Further, the company received an order for five more 787-8 Dreamliners and an added commitment to purchase two large freighters, valued at about $1.9 billion, from Azerbaijan Airlines. Additionally, the Chicago-based aerospace giant managed to win an order to lease six 787-9 Dreamliners to Egyptair.

While most continued to speculate, Boeing seems to have known what was coming well in advance. Earlier in June, Boeing released its global market outlook for commercial jets. In the report, the company raised its 20 year forecast for global commercial aircraft demand by 3.6%. The largest aircraft manufacturer predicted that there will be a requirement for more than 41,000 new planes worth about $6 trillion between 2017 and 2036, globally.

Furthermore, at the airshow, Boeing reported its 20 year forecast for the Middle Eastern region. In it, the company highlighted that demand for commercial jets in the region will be around 3,350 new planes, worth close to $730 billion.

All in all, it seems as though a reversal in the commercial aircraft order market is in the works. Overall, we are witnessing a heavy rise in commercial passenger and freight traffic, driven primarily by demand in emerging markets. Keeping in account these improving statistics and the aforementioned discussion, it seems very plausible that Boeing is looking ahead to smoother skies. Finally.

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