U.S. plane maker Boeing (BA, Financial) continues to enjoy its supremacy over other aircraft manufacturers, and this was well conveyed through the dramatic 2014 results where it delivered a total of 723 planes for the full year, thereby managing to retain its title of the market leader and creating a new record. The current slump in oil prices are expected to affect the order count for this year from the analysts’ corner, and Boeing’s management is also upbeat on being able to add on more orders for fuel efficient aircraft and reach its set target for 2015. Let’s introspect further and find out what happened in 2014 and what the management is contemplating with respect to its order book for 2015.
Boeing maintains the lead in 2014
During 2014, the airplane manufacturer managed to book gross orders for 1,550 planes and net orders of 1,432 planes. The total booking orders stood worth $232.7 billion at their listed prices. This took the net order count up 6% on a year-over-year basis.
Boeing managed to deliver 485 737 Next generations, 24 777s, 3 767s, 7 747s and 35 787s during the past year. The current environment of falling crude oil prices is expected to churn better profits for airlines and aircraft manufacturers for the year, and Boeing is not to be left out in the race of growing its order book in 2015. In fact in the era of competitive pricing in the global energy market, companies such as Boeing would benefit from the increase in new orders and a few days back, the top brass has admitted that this lead position would be well-kept in 2015 as well over other rivals and especially Airbus (EADSY, Financial).
Management tone remains firm
Just a day back, one of the chief executives at Boeing stated that the company forecasts a solid demand for the 737 Max narrow-bodied aircraft despite falling crude oil prices. This refers to the interest of airlines to still pursue buying fuel efficient aircraft even though there is a current dip in oil prices.
In an interview with Reuters, Boeing’s global vice president for sales and marketing, John Wojick stated, that the slide in oil prices would not undermine new jet demand. He added that the pricing for the narrow-body 737 Max, the revamped version of Boeing’s best selling engine remains solid as the company moves into its near future.
He firmly believed that, although the price of oil may be down to $40 per barrel, it would be sensible to upgrade to new technology in the long run. He further reminded that the oil price had been at $40 when Boeing launched the 787 Dreamliner – thus oil price cannot deter the making or new orders or deliveries of the fuel efficient airplanes.
Wojick was confident on Boeing filling the order gap for the current version of its large twin-engined 777 pending the arrival of the new model in 2020. In fact, he reiterated that the company has already been successful in filling half of the gap with 278 Boeing 777-300ERs left to be build.
The best part of the story hit on January 20, when United Airlines confirmed the reports that it was considering the exchange of some of its existing orders for the 777-300ER.
Final word
Analysts have long stated that Airbus remains the leader in the narrow-bodied segment and Boeing maintains its lead in the long haul category. But Boeing’s executives seem optimistic on both the fronts as conveyed in the recent interview with Reuters. As the environment of falling oil prices is expected to continue into 2015, let’s close watch how the fuel efficient airplanes sales remains undeterred among airlines and the best way to judge this could be through the order backlog study of the airplane manufacturers. Boeing’s order book might soar further, so let’s stay tuned.
