My Account Menu

CAPA Login


Register to trial CAPA Membership!

Boeing stock hits new high after Qantas 787 order

15-Dec-2005

SAN FRANCISCO (XFNews) - Boeing Co.'s stock hit a record high Wednesday after Australia's Qantas said it would buy up to 115 of its 787 Dreamliner jets in what is the biggest order yet for the world's largest aerospace company's newest planes.

Boeing, a component of the Dow Jones Industrial Average, said it's finalizing the details of the sale, which is structured to include orders for 45 Dreamliner jets with options for 20 more. Qantas also has purchase rights for an additional 50 planes.

Boeing's stock closed up 86 cents at $71.45, a new closing high. During the session, Boeing shares reached $71.98 at one point. Some analysts expect more gains.

"I think the stock will be flat for a short period of time here but by the end of 2007 it will be a $100 stock," said Paul Nisbet, aerospace analyst with JSA Research

If the order is a victory for Boeing, it is a defeat for Airbus, which had offered its A330 and A350 models to Qantas. For a 787 with a list price of $135 million, the 45-aircraft order is valued at more than $6 billion.Tallying up the options and the rights for all the planes gives the deal a value of $15.5 billion.

Before the Qantas deal, Boeing had 185 firm orders for 787s this year, more than any other Boeing plane except the smaller 737, which has attracted 462 orders.Both planes have been an important driver of Boeing's surge in orders this year.

For both Boeing and Airbus, it is non-American carriers that are eager for new planes, while U.S. airlines weather a turbulent market. Nisbet noted that Boeing's 747 is outselling the superjumbo Airbus A380 this year and the 777 is outselling the A330 and A340.

"Airbus is really having some difficulty with the widebody aircraft," he said.

Boeing, based in Chicago, expects to deliver the first four Dreamliner planes to Qantas' Jetstar unit in 2008, with a total of 28 anticipated to be in operation by December 2011.

Qantas said the new Boeing planes will be used to build out its long-haul routes, including flights with its Jetstar low-fare brand.

It also said the bidding process, which began in August, was "very competitive, with excellent options proposed by both Boeing and Airbus."

The composite technology used in the 787, Qantas said, would help cut maintenance costs.

Because the plane is lighter owing to the composite construction, and uses fuel efficient engines, it will burn less fuel - a strong selling point at a time when jet fuel prices are a big burden on the industry.

Boeing's stock finished Tuesday's session at $70.59 after the company announced a 20% increase to its quarterly dividend to 30 cents a share. Boeing shares are up almost 36% this year.

The A350 is a new design that has a composite wing, while the Boeing 787 uses composites for its fuselage and wings, a first for a jetliner.


Want more analysis like this? CAPA Membership gives you access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find out more and take a free trial.