Aerospace giant The Boeing Company (BA) announced it received a commitment from Swiss International Air Lines (SWISS) for the purchase of six 777-300ER (Extended Range) airplanes. The cost of the airplanes will be $1.9 billion at current list prices. SWISS is a part of the Lufthansa Group.
The 777 -300 ER model is preferred by airline operators due to its capability to fly long distances with more than 350 passengers. This aircraft is 18%-20% more fuel efficient than other rival models in this range. The spacious interiors of the airplanes increase the comfort level of the passengers. The maximum flying range of the aircraft is 7,825 nautical miles (14,490 km). These very features would help SWISS to retain its competitive edge over other airliners which operate airplanes with more than 300 seats on similar routes.
The gradual recovery in the global economy is bringing in a steady improvement in passenger and freight traffic. As per the International Air Transport Association (IATA), global airline passengers will touch 3.6 billion in 2016, expanding 5.3% per annum in the period 2012 to 2016.
This is amply reflected in the order book of Boeing. The company was able to secure net bookings for 805 airplanes in 2011, which jumped to 1,203 airplanes in 2012. Fresh bookings continue to trickle in this year. Till Mar 12, 2013, Boeing received net orders for 191 airplanes, out of which 11 were for the 777 variant. The 737 model has won the most bookings to date with 138 airplanes.
Recently Boeing was able to secure a $4 billion order for its commercial planes. United Continental Holdings Inc. (UAL) ordered eight 737-900ERs, Qantas ordered five aircrafts and leasing company GECAS ordered for another four airplanes. On the other hand, 10 big 777 airplanes have been ordered by Air Lease Corp. (AL).
Despite a busy order book, Boeing is yet to resolve the battery related problems of its 787 model. Though the company has received regulatory nod to carry on testing of new batteries, it is still uncertain when this technologically sound airplane will resume commercial operation.
Apart from the commercial airspace, Boeing is also one of the leading players in the U.S. Aerospace and Defense sector. The uncertainty prevailing over the U.S. defense budget and sequestration might impact the defense revenue of the company. Boeing and its aerospace peer Lockheed Martin Corporation (LMT) currently retain a Zacks Rank # 2 (Buy).
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