Boeing Wins $11.3B Order From VietJet For 737 MAX Airplanes

The Boeing Co. BA has won an order worth $11.3 billion at list prices from VietJet Aviation Joint Stock Company, a Vietnamese carrier, for 100 737 MAX 200 airplanes. This marks the single largest commercial airplane purchase by a Vietnamese company.

The agreement was signed between Nguyen Thi Phuong Thao, President and CEO of Vietjet and Ray Conner, President and CEO of Boeing Commercial Airplanes at the Presidential Palace in Hanoi during President Barack Obama’s visit to Vietnam.

Delivery of the airplanes will commence in 2019 and run through 2023. With this agreement, Vietjet will be able to expand its fleet to over 200 airplanes by 2023 end, incorporating the world’s most modern and advanced technology.

Nguyen Thi Phuong Thao believes that this agreement will allow Vietjet to contribute to the expanding joint trade turnover between Vietnam and the U.S. as well as to the development of the aviation industry in Vietnam.‎

The 737 MAX 200 is an upgraded version of the 737 MAX 8. This variant has the capacity to seat 200 passengers, an increase of 11 seats from the previous versions of the 737. The model’s fuel efficiency per seat is also 20% higher than its peers in the single-aisle aircraft market.

Boeing is the largest aircraft manufacturer in the world in terms of revenues, orders and deliveries, and is one of the largest aerospace contractors. Its revenue exposure is spread across more than 90 countries around the globe. Demand for Boeing’s commercial airplanes is on the rise due to a steady improvement in passenger and freight traffic.

We remind investors that in the first quarter of 2016, the Next Generation 737 model single-aisle jetliners proved its unfaltering popularity yet again, with the delivery of 121 airplanes. Currently, the company is producing 737 at the rate of 42 per month and it plans to ramp-up production to 47 per month in 2017, 52 per month in 2018 and 57 per month in 2019.

Boeing currently has a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the aerospace and defense space include Engility Holdings, Inc. EGL, BAE Systems plc BAESY and CAE Inc. CAE, each carrying a Zacks Rank #2 (Buy).

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