Boeing Wins $34B Order from Qatar Airways; Shares Pop 5%

The Boeing Co.(NYSE: BA) is witnessing a fantastic start to the year 2022 with two big orders in hand. Yesterday, Boeing bagged an order valuing $34 billion from Qatar Airways for its 737 Max jets and the promising new 777X freighters.

Last week, Boeing bagged an order worth $1.4 billion from Taiwan’s state-owned carrier China Airlines.

Following the news, shares popped 5% to close at $200.24 on January 31.

Boeing Launches 777-8 Freighters

Yesterday, Boeing launched its promising 777-8 Freighters, one of the largest, longest-range twin-engine cargo jets in the world. The jet also boasts a 25% improvement in fuel efficiency, emissions, and operating costs making the operator’s business highly sustainable and profitable.

The 777-8 jet belongs to the 777X family of freighters and will be built in Boeing’s Everett, Washington, factory. The company has invested more than $1 billion in the Washington manufacturing plant to support the 777X production and has created thousands of jobs.

The COVID-19 pandemic has resulted in flying restrictions and lowered the business for passenger carriers. However, the cargo carriers saw a huge surge in demand to fulfill the growing e-commerce businesses amid the global supply chain and logistics disruptions.

Qatar Airways’ Order Valuing $34B

Qatar Airways, which is one of the world’s largest cargo carriers, has ordered 50 of Boeing’s new 777-8 freighters, 34 confirmed, and options to purchase 16 more jets totaling more than $20 billion at current list prices. This also marks the biggest freighter order in Boeing’s history in terms of value.

The initial delivery of the freighter is expected in 2027. As part of the deal, Qatar will convert 20 of its 60 777X family orders to the new 777-8 freighter jets. Moreover, Qatar is also ordering two current 777 freighters.

This order will generate more than 35,000 U.S. jobs, support local U.S. suppliers across 38 states, as well as contribute around $2.6 billion annually towards the economy during the contract’s delivery time frame.  

The formal signing agreement was undertaken at the White House in the presence of Commerce Secretary Gina Raimondo, His Excellency Ambassador Sheikh Mishaal bin Hamad Al Thani, Director of the White House National Economic Council Brian Deese, and Boeing President and CEO Dave Calhoun.

The record-breaking deal was signed by Boeing Commercial Airplanes President and CEO, Stan Deal and Qatar Airways Group Chief Executive, His Excellency Mr. Akbar Al Baker.

Additionally, Qatar and Boeing also signed an MOU for an order for 25 737-10 jets and purchase rights for more than 25 jets. The 737-10 jets are the largest body in the MAX family and the order totals $7 billion at current list prices.

Company Comments

Akbar Al Baker said, “Today marks a great day in the ever-building and strong relationship between Qatar Airways and Boeing. We certainly push Boeing hard to deliver upon our expectations, and the team at Boeing consistently strives to meet and exceed our expectations, giving the opportunity for us to be here today to launch the most significant new freighter aircraft for a generation.”

Commenting on the 25-year-long history of the partnership, Deal said, “Our team is ready to create an airplane that will serve them well for many decades. Qatar Airways’ selection of the efficient 777-8 Freighter is a testament to our commitment to provide freighters with market-leading capacity, reliability, and efficiency.”

Analysts’ Take

Yesterday, Argus Research analyst John Eade lowered the price target on the stock to $210 (4.9% upside potential) from $230, while maintaining a Buy rating.  

With 14 Buys and 4 Holds, the BA stock which is one of the most trending stocks, commands a Strong Buy consensus rating. The average Boeing price target of $261.06 implies 30.4% upside potential to current levels.  

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