Boeing (BA) has received an order for fourteen 737 MAX jets from SMBC Aviation Capital as the latter gears up for a recovery in air travel.
Boeing Senior Vice President of Commercial Sales and Marketing Ihssane Mounir said, “SMBC has been actively managing its portfolio in a very dynamic market. With this new order for the fuel-efficient 737-8, the lessor is well-positioned to help its customers capture domestic travel demand in several countries and regions.”
SMBC Aviation Capital CEO Peter Barrett said, “We are pleased to have concluded an agreement with Boeing for the purchase of 14 low-cost carrier configured 737 MAX aircraft which is an aircraft we are seeing increased customer demand for following its successful return to service.”
Importantly, Boeing has been seeing robust demand for its offerings. Apart from the SMBC order, it has seen orders and commitments from Alaska Airlines, Southwest Airlines, and United Airlines. Boeing has now received orders and commitments for more than 250 737 MAX airplanes this year. (See Boeing stock analysis on TipRanks)
Boeing’s 737-8 plane offers higher fuel efficiency and can fly 600 miles farther than its predecessor. This allows airlines to offer new and direct routes to passengers. The plane also reduces operating costs and emits 16% less CO2.
Yesterday, Jefferies analyst Sheila Kahyaoglu reiterated a Buy rating on the stock with a $300 price target (26.3% upside potential).
Kahyaoglu commented, ”Of the 484 MAX in the active fleet, 316 aircraft remain in storage despite recent recertification. Excluding the 97 aircraft in China, 57% of the fleet is currently in storage. The fleet has been hampered by recently resolved issues with electrical wiring.”
Despite these issues, the analyst noted that the number of MAX flights has increased from 4,027 in March to 5,950 in May.
Consensus among analysts is that Boeing is a Moderate Buy based on 7 Buys and 7 Holds. The average analyst price target of $269.69 implies 13.6% upside potential.
Shares have gained about 64% over the past year.
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