American aero major Boeing (BA, Financial) recently reported the delivery numbers for the first quarter of 2015, and the numbers are definitely encouraging. According to an Aviation Week report, Boeing CTO John Tracy spoke of the company’s plans to pull the delivery count to 900+ aircraft yearly in the next few years. At the current rate of delivery growth, this target seems easily achievable and that also soon enough – may be by the end of the current year. Here’s a lowdown on what happened and how things look from here on.
The best Q1 delivery in a decade
Boeing was able to mitigate investor and analyst concerns about the first quarter deliveries with its latest set of numbers. The Chicago based company reported total deliveries of 184 jets during the three months ended in March, up from last year’s 161 jets, translating into a year over year improvement of 14.3%. In fact, the delivery count has been the best in a decade (Note: for the purpose of the analysis, only data for the last ten years has been considered). The following chart shows Boeing’s deliveries for the first quarter of every year between 2006 and 2015.
Boeing's Q1 deliveries in a decade. Data taken from Boeing
For the latest period, Boeing delivered 121 737 jets, 30 787 Dreamliners, 24 777 jets. Apart from these it also delivered 4 ‘Queen of the Skies’ 747 jets and 5 767s – that’s an interesting combination. The huge demand for the Dreamliners and the 737 is known to all. But the delivery of the 747s and the 767s have some special significance. The demand for these two models have been declining over the years and now the company is having trouble in keeping the production lines active. For the 747, Boeing is hopeful and believes a huge market is still out there and it’s only a matter of time before the demand for the epic aircraft revives.
Boeing’s 2015 Q1 delivery mix. Data taken from Boeing
Here’s an encouraging trend
I have observed a trend in the delivery data reported by Boeing - usually Q1 happens to report the lowest deliveries compared to the rest of the quarters, and as the year progresses, deliveries pick up. For the last couple of years, Q4 has been the best quarter in terms of deliveries. In this case, for the remaining year we can expect even better deliveries from the aero major. No doubt 184 jets delivered in Q1 is a great number, but the numbers are about to get even better.
Boeing’s delivery trend shows Q1 records the lowest deliveries for a year. Data taken from Boeing
Quicker deliveries to aid Boeing’s growth
Quicker deliveries are important for an aircraft maker because it helps convert orders into cash and this boosts revenue and functioning of the business. Another reason why quicker deliveries are important is airlines will find it more convenient if they can get a hold of their new planes faster. With every flight on a dated aircraft airlines are losing money and the faster they are able to make the shift to newer technology, the better it will be for them. Again, if an aircraft maker is able to deliver jets faster than its competition, it will enjoy a competitive edge and this is good for business.
Keeping all this in mind, Boeing plans to provide the quickest turnaround possible. Currently the company produces 42 737 jets a month (increased from 38 a month till second quarter of 2014), 1.5 747 a month, 1.5 767 a month, 8.3 777 a month, and 10 787 a month. Boeing also plans to hike the production rate for a couple of its latest and in demand models, such as the 787 Dreamliner and the 737s – 12 to 14 787s a month in future years and 47 737s a month in 2017. Boeing is putting in the hours and hard work every month to deliver more and more jets. Last year, the company had delivered more than 720 jets and now it plans to deliver 900 plus jets annually. Looking at the latest set of numbers, the company looks to be on track to attain its future goal.
