After record deliveries in 2018, Boeing sees a fruitful year ahead

After ending 2018 on a positive note, Boeing (BA) is gearing up to meet its production and delivery goals for the current year, riding the growing demand for passenger planes. Meanwhile, considering the impact of the trade war on the aviation industry, the outlook for Boeing could fluctuate depending on the market conditions.

Boeing delivered a record number of aircrafts last year, but the numbers fell short of the management’s expectations. However, the company maintained its lead over arch-rival Airbus, continuing the recent trend. Having strengthened its business ties with American Airlines (AA) and United Airlines (UAL), the Illinois-based aircraft maker reportedly added regional carries like Hawaiian Airlines and Turkish Airlines to its client list.

Total deliveries increased by 5.6% year-on-year to 806 units in 2018 when the 737-model accounted for a major chunk of sales. The strong order backlog indicates that busy days are awaiting the company in the coming years. Last year, orders worth $143.6 billion were recorded.

Total deliveries increased by 5.6% from last year to 806 units in 2018, when the 737-model accounted for a major chunk of sales

Boeing’s proposed acquisition of majority stake in South American aircraft company Embraer, which is currently being evaluated for antitrust clearance, will have a positive impact on performance this year if the deal gets the green signal from Brazilian authorities. The majority of the research firms that covered Boeing recently maintained their buy rating on the stock, with an average price target of $434.

Meanwhile, the company’s tanker project continues to be a dampener for it. The initiative, which involves the production and delivery of aircraft refueling jets for the military, did not take off last year. Despite completing advanced-stage tests in December, Boeing missed the schedule and failed to deliver the first tanker jet before year-end.

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The nature of the industry is such that it gets influenced by volatilities in the global economy. How Boeing fares this year will be decided – to some extent – by the prevailing geopolitical uncertainties, especially the trade tension between Washington and Beijing.

Underscoring the bullish outlook for the commercial aviation industry, the delivery numbers of Airbus also stood at an all-time high last year. At 800 units, deliveries rose 11% from the preceding year and matched the company’s estimates.

Boeing shares gained in early trading Wednesday after closing the previous session up 4%.  The stock rose about 16% since last month after hitting a twelve-month low.

 

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