Boeing bagged 1,550 gross orders last year
Seattle : Boeing bagged 1,550 gross orders in 2014 valued roughly at US$247 billion. The top three orders by value accounted for approximately US$90 billion, or more than 36 per cent of the total gross order value at list prices.
Boeing does not break out its net orders and does not name some of its customers. But even with these constraints, a deeper look into Boeing’s order trends and its top three orders could give investors important clues about the future direction of the commercial aviation industry.
Here are four key trends the Boeing’s 2014 order wins revealed:
Asia is gaining importance
In its recent market outlook, Boeing says air traffic is growing rapidly in Asia. While in 1993 North America and Europe accounted for 73 per cent of air traffic, the two regions will make up only 38 per cent by 2033.
Asian airlines are ordering more aircraft to cater to the continent’s expanding aviation industry. This became clear in Boeing’s 2014 order wins — all three of its biggest orders were from Asia.
Boeing’s overall order trend also underscored Asia’s importance. Asia accounted for the lion’s share of the ordered units and the order value in 2014.
Middle Eastern airlines are growing fast
Two out of the top three orders were from Middle Eastern airlines — Emirates and Qatar Airways. Located in a strategically important spot, the Middle Eastern nations serve as hubs and are seeing growing demand from both domestic and international air travellers.
According to a Wall Street Journal report, the three major Gulf airlines — Etihad, Emirates, and Qatar Airways — have seen passenger traffic growth in the past two years that well exceeds that of other global airlines.
Etihad has seen a 43.3 per cent increase, followed by Emirates with 34.2 per cent, and Qatar Airways with 27.3 per cent growth.
British Airways, in fourth place, trails far behind at 11.9 per cent. It’s little surprise that Gulf airlines emerged as the top buyers of Boeing planes.
BoeingB777s win the biggest orders
The B777 family is Boeing’s most popular wide-body plane and its largest revenue driver. Carriers prefer to fly wide-body aircraft on long routes with heavy traffic, and they also carry a bigger price tag than their narrow-body counterparts. The list price of B777-300ER is US$330 million, compared with the B737-800, which comes for US$93 million.
Plane makers sell fewer wide bodies, but they generate revenue comparable to that of narrow bodies, which sell in bulk.
Boeing’s top three orders by value consisted entirely of wide-bodies — the B777s and B787s, with B777s accounting for the lion’s share.
All of the top three customers opted for the upgraded version of the B777 that Boeing is currently building. Known as the B777X, the new planes will enter service in 2020.
Boeing B737 is missing from top 3, but …
The B737 is Boeing’s best-selling plane. It does not feature in the top three orders by value, as, again, the list price of B737 planes is lower than that of wide bodies.
But looking at overall orders, both in terms of gross order units and value, it remained Boeing’s most important aircraft programme.
Summing up
Boeing’s top three orders by value and the general ordering trend at the aero major offer insights that should help investors better understand the commercial aviation industry. In particular, to gauge Boeing’s future growth prospects, investors need to keep an eye on the developments in the Asian market, performance of Gulf operators, and Boeing’s B737 and B777 aircraft programmes.
