Boeing: The Year In Review

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The Boeing Company

Things seem to have finally turned around for Boeing (NYSE:BA) this year after a difficult 2016, in which 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.

While the year started off slow, yet positive, the end of the year marked an official turnaround for the commercial aircraft market, and consequently, a turnaround for Boeing. The aircraft manufacturer benefited greatly from increased demand from the Middle East, and other emerging economies.

Key Highlights From The Year:

  • As mentioned previously, 2017 marked the end of the slump in the commercial aircraft market. Despite starting the year off slow, there was a marked increase in demand from the first quarter itself as passenger traffic came in well above the then GDP, with the overall growth figure coming in just under 8% year-over-year. These factors coupled with low oil prices contributed to a surge in order activity the world over – particularly for the 737 MAX.
  • Given the increased demand, healthier market conditions, and a robust backlog, in Q2, Boeing decided to increase the production rates across most of its programs. For instance, at the 737 program, the company decided to increase production to 57 jets a month on a backlog of nearly 4,500 aircraft, as early as 2019. Even the widebody market saw healthy gains. The 777 production for FY 2017 was completely sold out by May.
  • 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 now predicts that there will be a requirement for more than 41,000 new planes worth about $6 trillion between 2017 and 2036, globally.
  • In all respects though, the Dubai Airshow, which concluded last month, perfectly encapsulated the company’s return to a healthy future. Boeing recorded a major order book increase of close to $47 billion. While most of the orders were for the 737 MAX aircraft, the company managed to capture a good mix in orders. The company managed to take in about 51 widebody orders and commitments, including the critical Emirates deal that was supposed to go to Airbus.
  • 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.
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