Aircraft Stocks Take Orders: Big Deals at the Paris Air Show
Today airlines and aircraft manufacturers from around the world met at Le Bourget airport to kick off the Paris Air Show. The show is essentially a big sale, with airlines making their orders for new aircraft, usually from U.S.-based Boeing (NYSE:BA) or France-based Airbus (FR:EAD), which combined make up for almost 100% of commercial aircraft in the world.
With fuel prices so high, the International Air Transport Association has slashed projected 2011 profits for the airline industry by 54% to $4 billion, a figure that is 78% below last year’s net profit of $18 billion. Credit Suisse (NYSE:CS) is projecting orders to total 51 to 100 units each for Airbus and Boeing, totaling between 102 and 200, a number than has been exceeded in five of the past six air shows. However, with the introduction of Airbus’ new A320Neo, Airbus could have more orders than projected. As it stands, analysts expect Airbus to account for 90% of the orders made at the air show this week.
Here’s a look at sales so far:
Qatar Airways announced Monday they will buy six 777-300ER airplanes from Boeing in an order valued at $1.7 billion. The 777-300ER planes can carry 365 passengers up to 7,930 nautical miles. Qatar Airways currently owns twenty-five Boeing planes, but is set to be the launch airline French-based Airbus’A350-1000, created in direct competition with Boeing’s 777-300ER. However, at the Paris Air Show, Airbus pushed back the planned arrival of their new plane from 2015 to mid-2017. Qatar Airways, which had the largest order of the A350-1000s, announced their disappointment at the change, saying it would hurt their plans for growth.
Boeing also announced orders and commitments for seventeen 747-8 Intercontinental aircraft in a $5.4 billion purchase by two undisclosed customers, with one carrier purchasing fifteen of the new passenger version of the 747-8 and the other purchasing two. With Monday’s orders, Boeing now has commitments for fifty 747-8 Intercontinentals and one hundred and twenty-six 747-8 aircraft when counting the seventy six orders for 747-8 Freighters.
GE Capital Aviation Services (GECAS), the commercial aircraft leasing and financing arm of General Electric (NYSE:GE), announced Monday their order of sixty A320Neo narrow-body aircraft from Airbus for delivery in 2016, bringing the total number of A320 family aircraft ordered by GECAS to three-hundred and ninety. According to Airbus, the efficient design of the new plane will save 15% on fuel. GE plans to outfit all sixty A320Neo planes with CFM International‘s LEAP jet engine. CFM is a joint venture between General Electric and France’s Safran Group (EPA:SAF).
Saudi Arabian Airlines announced today that they’d placed an order for four more Airbus A330-300 aircraft, giving them a total of twelve, and expanding their airbus fleet to sixty-two aircraft.
Scandinavian Airlines has ordered thirty Airbus A320neo jetliners in a deal valued at $2.55 billion. The airline already has an existing fleet of eight A321s and four A319s. SAS will announce later whether the A320neos will use engines from CFM International or Pratt & Whitney, a division of United Technologies Corp. (NYSE:UTX).
AirAsia is reportedly finalizing a record $17 billion order from Airbus for two hundred A320 aircraft, with the contract due to be announced Thursday. If it goes through, it will set the record for the most aircraft purchased at once by any airline.
Air Lease Corp. (NYSE:AL) has agreed to buy sixty-two jetliners, including fifty of the new fuel-efficient A320neo aircraft, from Airbus a deal that could total as much $8.31 billion, though buyers usually receive a discount when purchasing such a large quantity of aircraft at once. Air Lease also plans to purchase eleven of Airbus’ A330 and one A321 aircraft, as well as up to 33 aircraft from Airbus’s rival, Boeing. The agreement includes 14 confirmed orders for the Next-Generation 737-800 jetliner and options to buy four more as well as orders for five 777-300ERs and four 787-9 Dreamliners. And there is also the possibility exercising options from a prior-year order for six 737-800.
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