A while back, Air India placed an order with aerospace stock Boeing (BA), which also had an option to purchase more aircraft later on. But new reports suggest that Boeing will not be landing that order, as Air India is not exercising the option. Interestingly, investors seemed unconcerned, and shares were up fractionally in Thursday afternoon’s trading as a result.
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Basically, Air India looked at Boeing’s massive backlog of orders and realized that any planes it ordered from Boeing would probably take several years to arrive. While certainly, Boeing has picked up steam in recent months on production, it is still struggling to get back to even where it was previously. And that, coupled with some natural sense of caution, left Air India looking to make do with the orders it already placed.
Air India’s expansion strategy has been measured so far, but still quite expansive. Back in 2023, it placed orders for 470 new aircraft, including 220 from Boeing and 250 from immediate rival Airbus (EADSY). Air India could have picked up another 70 Boeing aircraft, but decided against it in the end.
Improving Customer Service
While this was not the best of news, a bit of customer testimony likely did not hurt matters for Boeing. One of Boeing’s biggest customers, Avolon, noted that it was “…really encouraged…” by Boeing’s progress so far coming off 2024. Avolon’s CEO, Andy Cronin, pointed out two key factors in particular: Boeing’s “level of clarity” and its “visibility” on the production gains so far.
Given that Avolon is the second-largest aircraft leasing company around, it likely has a very good handle on Boeing’s position in the market, and on Airbus’ responses as well. And Avolon is especially heartened by Boeing’s pushes for “production stability.” But with Airbus having an impressive fourth quarter, Avolon warned, that could do some unpleasant things to the supply chain.
Is Boeing a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BA stock based on 13 Buys, five Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 7.96% loss in its share price over the past year, the average BA price target of $196.29 per share implies 4.92% upside potential.
