The Boeing Co. (NYSE:BA) and Airbus (NYSE:EADSY) to Benefit from the Sudden Need of Commercial Planes
Financial gurus at Moody’s Investors Service forecast a rise in large commercial plane deliveries, almost by 3 to 5 percent that will neutralize a decline in the defense spending. This would be because of the booming commercial market that would push a waning defense environment. The hike in commercial airline traffic along with fuel prices plummeting and the improvement in economy all around indicate a need for commercial airplanes. The airline companies are looking at a boom in the airline sector and profits tumbling down upon them.
Airline profitability will keep growing, at a growth rate of 6 percent which will be an addition to the airline demand for replacement of planes and market expansion. The companies that will prosper from this boom are The Boeing Co. (NYSE:BA) and Airbus (NYSE:EADSY). Both of these companies carry record orders in their order books and both these companies are upping their production to sustain their delivery growth. Analysts forecast a growth rate of about 4 percent for the next couple of years.
The Boeing Co. (NYSE:BA) holds a backlog of 5,552 in which 4,033 of those orders are for the 737 airplanes, which are the company’s most famous and best selling. Similarly, Airbus (NYSE:EADSY) holds 5,907 backlogs in which 4,748 are for A320 airplanes, which are equal to Boeing Co. (NYSE:BA)’s 737 airplanes.
Both the companies will remain strong in the next 4 years. The Boeing Co. (NYSE:BA)’s total production will land at 730 while Airbus (NYSE:EADSY) will stand at 632. The Boeing (NYSE:BA) will be holding a meeting on the 8th of January regarding its production and delivery plans. It’s a great time for these airline companies to make good on the opportunity provided to them by the booming economy and the consistently lowering fuel prices.
We can’t think of a time when there was such a need for commercial planes; a time when the airlines could afford such backlogs. But now with the fuel prices standing at almost minimal rate and the economy steadily improving, commercial planes have come into demand more than ever and who else will benefit from that but the airline companies that manufacture planes.
The Boeing Co. (NYSE:BA) has been around for decades. The planes it has manufactured are globally known, especially the 737 plane which is behind most the revenue made by the company.
Similarly Airbus (NYSE:EADSY) has been around for quite some time and has rolled out good commercial planes. As aforementioned, both these companies hold orders for planes more than any other airline company, which shows that both these companies are chosen ahead of the other companies regarding the reputation The Boeing (NYSE:BA) and Airbus (NYSE:EADSY) holds. So in order to live up to that reputation and expectations, The Boeing (NYSE:BA) and Airbus (NYSE:EADSY) will have to deliver quality commercial planes. In return, they can be looking at billions of dollars made through these orders. On top of that, investors will start to get interested once they see how much revenue these companies are accumulating.