American aero major Boeing (BA, Financial) seems to be on a roll. Last year the company delivered an epic number of aircraft, reaching a total of 723 jets, the highest to date and up 12% over 2013. This was followed by fantastic January deliveries of 50 jets. And now in February, the Chicago-based company posted superb delivery figure of 63 jets. The company is pacing towards its goal of reaching annual production of 900-plus aircraft.
According to an Aviation Week report, speaking at the American Institute of Aeronautics and Astronautics SciTech conference, Boeing’s CTO and Senior VP John Tracy mentioned, “delivery of airplanes has gone up by around 80% over the past four years, and it is going to continue to grow. We delivered more than 720 this year, and it will grow easily to over 900 over the next few years. There is a tremendous demand for these products.” With this in mind, let’s check out Boeing’s February delivery numbers to gain some valuable insight.
The recent delivery mix
During the month, Boeing delivered a total of 63 jets. The 737 continued to be the popular choice, as always, and the company delivered a total of 43 jets or 68% of total deliveries. The 787 Dreamliner saw the second highest deliveries – 12 jets or 19% of total deliveries. For the 777, total deliveries came to 6 jets. But out of this, 3 jets were freighters. Finally, coming to the 767 and the 747, both the models saw delivery of one jet each. Numbers for these two models have been depressing in the recent years. Last month Boeing had delivered one 747 and two 767 aircraft. The following chart shows Boeing’s February 2015 delivery mix, according to aircraft family and models.
Source: Boeing
Popularity of Boeing’s offerings increasing consistently
The demand for new jets, and particularly the fuel-efficient ones, has been increasing constantly. Some attribute the increased demand to lower fuel prices that’s translating into higher carrier profits, and some attribute the growth to replacement of aging fleet. Be it replacement or expansion, airlines are likely to go for costlier fuel-efficient jets, compared to relatively cheaper oil guzzlers. Fuel accounts for one-third of the operating expenses of airlines, and carriers are thus always looking for ways to minimize fuel burn, even when crude oil prices are at the lowest level in decades. This trend is clearly visible in Boeing’s delivery numbers also. The following table gives a snapshot of deliveries between January 2010 and February 2015.
Source: Boeing
In contrast to the popular belief that lower fuel prices will kill the demand for fuel-efficient jets, demand for Boeing’s new fuel-sipping jets are increasing. Looking at the 787 Dreamliner deliveries, it becomes clear how much demand is out there. Delivery figures can be considered as a proxy of demand. In 2014, Boeing delivered 75% more planes compared to 2013. This year the figure is expected to shoot up to 120-plus units. Next, coming to the next generation 737, deliveries are going strong. In each of the past years, the number has increased, and now with the 737 MAX expected to launch in 2017, the figures are expected to shoot up even further. The same goes for the 777. Boeing will launch the 777X in 2020.
So far this year the company has already delivered a total of 113 jets, up from 95 jets delivered in the first two months last year. For the current year the company plans to deliver between 750 and 755 jets, as mentioned by Boeing CFO Greg Smith during the fourth quarter 2014 earnings call. At the current production rates and delivery pace, the expected figures don’t seem impractical or unachievable.
