Tuesday, May 9, 2023

Boeing Jumps on $40B 737 Max Order; Ryanair Bets Big on Postpandemic Travel

Boeing shares jumped on Tuesday after Europe's biggest discount airline, Ryanair, made a $40 billion order for the plane-maker's workhouse 737 Max aircraft amid a massive bet on the strength of the post-pandemic rebound in global travel. 

Ryanair said it would buy as many as 300 737 Max jets, which carry a list price of around $40 billion if the deal is filled to completion. The carrier noted that the deliveries would be phased over a period beginning in 2027 and ending in 2033. 

Ryanair said the deal would enable it to "deliver sustained traffic and tourism growth at lower fares (and lower emissions per flight) across all European countries" as it "continues to lead the post-covid traffic, tourism and jobs recovery."

The order also follows Boeing's recent plans to boost 737 Max production rates to 38 aircraft per month, from the current pace of 31, over the near term. The aerospace giant is looking to meet its goal of generating between $3 billion and $5 billion of free cash flow before the end of the year. 

"The Boeing-Ryanair partnership is one of the most productive in commercial aviation history, enabling both companies to succeed and expand affordable travel to hundreds of millions of people," said Boeing CEO Dave Calhoun. "Nearly a quarter century after our companies signed our first direct airplane purchase, this landmark deal will further strengthen our partnership. "We are committed to delivering for Ryanair and helping Europe's largest airline group achieve its goals by offering its customers the lowest fares in Europe," he added. Boeing shares were marked 2.6% higher at last check following confirmation of the Ryanair orders, to change hands at $202.30 each.

Boeing Deliveries Top Airbus; Order Book Gains 

Last month, Boeing posted delivery figures that topped its main rival, Airbus, for the first time in nearly five years, thanks to a surge in demand for the 737 Max and its wide-body 787 Dreamliner.

Boeing's order book has also seen some impressive gains so far this year, including the first-ever sale of its workhorse 737 Max jets to Japan Airlines late last month.

JAL said it would buy 21 of the narrow-body 737 aircraft, at a list price of around $2.5 billion, with the aim of adding the planes to its expanding fleet by the year 2026.

The deal also represents a major win for Boeing over its European rival, Airbus, which had been courting JAL with its A320neo narrow-body jet.

Boeing has received commitments for the sale of more than 200 787 Dreamliners over the past two months. Those include a $37 billion deal with Saudi Arabia in March and a long-reported deal to sell nearly 300 jets to Air India, Asia's largest commercial carrier.

Boeing's commercial airplane backlog was pegged at 4,200 aircraft, with a value of around $291 billion, at the end of March, the company said on April 27. That day it posted a wider-than-expected-first quarter loss of $1.27 per share, as revenue rose 28% from a year earlier to $17.92 billion.

"Our customers are seeing record booking volumes and very strong forward yields for late spring and summer to the point of being able to offset sharply higher fuel prices, and they're also highlighting the return of business travel," Calhoun told investors late last month. 

(Martin Baccardax - TheStreet)




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