Boeing Secures New Orders for 737 MAX

November 25, 2019
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Boeing 737 MAX jets were grounded worldwide earlier this year, following two fatal crashes and the discovery of serious safety flaws. The company has since addressed software issues that contributed to the crashes, and it believes that an FAA Airworthiness Directive will remove the ground order by mid-December.

Even during groundings, interest in 737 MAX jets has been strong. Just last week, it was announced that Boeing had secured new orders worth up to 4.8 billion.

This is excellent news for Boeing investors.

Pending 737 Orders Will Drive Boeing Revenue in the Years to Come

As of September 2019, Boeing had delivered 387 of its new jets to customers, with 4,930 orders still pending. This leaves a significant amount of revenue and profit still on the table, which will start to flow through as the company ramps up production when the ground order is lifted.

The jets range in price from $99.7 million for the MAX 7 model, up to $134.9 million for the largest MAX 10 model.

Despite all the negative press surrounding the company in 2019, operators are still very interested in Boeing’s technology. Just last week, it was announced that two airlines had placed new orders, adding almost $5 billion to Boeing’s future revenue.

Air Astana is Kazakhstan’s flag carrier airline, and one of the highest-rated in Central Asia. The company has signed a new purchase order for 30 units of the 737 MAX 8 jets. At list price, this order could be worth up to $3.6 billion, although airlines often negotiate discount pricing on bulk procurement.

SunExpress, a discount European airline based in Turkey, ordered 10 units at the beginning of last week, and it was announced that it would be paying list price, for a contract worth $1.2 billion.

Shares were up after the orders were announced, helping to boost Boeing’s stock that has been recovering throughout most of this year.

Boeing’s Back Order List is Huge

According to Boeing, its backlog of orders is worth $470 billion. In the third quarter, it added $16 billion of new orders.

These orders will secure the company’s revenue stream in the coming years. The company will produce up to 57 planes per month by the end of 2020, and that number could increase as the manufacturing process matures.

Investors can still buy this stock for what is a relative bargain, as the current price is down significantly from the 52-week peak of $446.01. With a dividend yield of $2.21, it’s one of the most compelling large-cap stocks on the market today.

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