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Boeing (BA) Forecasts $5.2 Trillion Market for Commercial Jets

By: , dated July 10th, 2014

Shares of the Boeing Company (BA) were trading down -0.60 or -0.47 percent in pre-market trading this morning, after the company issued a press release forecasting a +4.2 percent increase in worldwide demand for passenger aircraft in the company’s 20-year Current Market Outlook. Boeing stock closed up +0.37 or +0.29 percent to $127.16 per share in Wednesday’s regular trading session. Chicago, Illinois based Boeing Company is an American multinational aerospace corporation involved in the design and manufacture of fixed wing aircraft, rockets, satellites and rotorcraft. The company’s main components include Boeing Military Aircraft, Commercial Airplanes, Network & Space Systems and Global Services & Support. Boeing is one of the largest aircraft manufacturers in the world and the second largest aerospace and defense contractor. Boeing’s Current Market Outlook report, released early this morning in London, projected worldwide demand for as many as 36,770 new airplanes over the next twenty years, a +4.2 percent increase over their previous estimate, and the company’s highest forecast since 2011. The company put an estimated value on the new airplanes of $5.2 trillion. The company’s Current Market Outlook forecast that 8,600 new twin aisle airplanes will be needed in the next 20 years, with small wide body airplanes accommodating 200 to 300 passengers, such as Boeing’s 787-8 and 787-9 Dreamliner aircraft. The forecast reflects increasing demand for smaller jets such as the 787-10 and the company’s new 777X, versus the company’s larger aircraft. Randy Tinseth, Vice President of Marketing for Boeing Commercial Airplanes stated, “This market is strong and resilient, with new and more efficient airplanes entering service, the growth in air travel is being driven by customers who want to fly where they want, when they want. Based on the overwhelming amount of orders and deliveries, we see the heart of the single-aisle market in the 160-seat range. There’s no question the market is converging to this size, where network flexibility and cost efficiency meet. The Next-Generation 737-800 and new 737 MAX 8 offer our customers the most revenue potential in this mid-sized space.” Boeing also predicted it would beat its rival, Airbus Group NV, in the market for twin aisle planes assembled and delivered over the next 20 years. Boeing’s new 777X and 787 jetliners already have as much as 65 percent of current orders, with Airbus making up the rest. Tinseth told reporters after the outlook’s release that, “If Airbus doesn’t do something with their product strategy, they’re headed to 30-35 percent market share,” in the twin aisle aircraft market. Airbus is already in the process of developing a competing jetliner and could launch the project at the upcoming Farnborough Airshow on July 14th. The new jetliner, called the A330neo is an improved version of the company’s twin aisle A330 with new more efficient engines manufactured by Rolls-Royce. Boeing stock is trading 18 points off of its yearly high of $144.57 made in January of this year. The stock seems to be under pressure and with this morning’s announcement, is not reacting favorably in premarket trading. Nevertheless, the company is trading at 21 times earnings and with a quarterly dividend paying $0.73, yielding +2.30 percent, which continues to make the stock an attractive investment. Other News About Boeing Boeing deliveries rise 7%, led by Dreamliner Company delivered 181 jetliners in the second quarter. Boeing Train Derails; Fuselages Dumped In River, Production Disruptions Likely Three complete fuselages and other airplane parks dumped in the Clark river in Montana. Other Stocks in the News Dish Asks F.C.C. to Block Comcast-Time Warner Cable Merger Dish is citing anti-trust issues to block the $48.5 billion deal. IBM to spend $3 billion to tackle cloud chip challenges Company will invest $3 billion over the next five years.

Jay Hawk Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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