Sign in Subscribe
Airlines

Boeing Soars on $6 Billion Air Canada Order

Strategic Insights

— 2 min read

In a significant boost to its commercial aircraft business, Boeing Company announced a $6 billion order from Air Canada, maker of the 787 Dreamliner, a fuel-efficient jet that is set to revolutionize the industry. The order, announced on Monday, includes 60 of Boeing's new 787 Dreamliners, as well as 18 firm orders for Boeing 777s, and purchase rights for 18 more. The Air Canada order is a major coup for Boeing, as the airline has traditionally been a customer of Airbus.

Key Takeaways:

  • Boeing's shares rose 3 percent on Monday, closing at $59.58, after the company announced a $6 billion order from Air Canada.
  • The Air Canada order is for up to 96 planes, including 60 of Boeing's new 787 Dreamliners, which will replace the airline's current Boeing 767 planes.
  • The agreement with Air Canada calls for 18 firm orders for Boeing 777s, plus purchase rights for 18 more.
  • The Air Canada order expands the market for Boeing's 777-200LR version and may indicate that this plane has superior performance to the Airbus A340-500.
  • The 787 Dreamliner is hitting a sweet spot with airlines, with oil prices topping $54 a barrel, as it promises to reduce fuel burn and maintenance costs by 30 percent.
  • The Air Canada order is subject to several conditions, and the value of the deal is based on list prices, with discounts expected to be applied.
  • Boeing's commercial aircraft business has seen a resurgence in recent years, with the company producing the bulk of its profit since the terrorist attacks of Sept. 11, 2001.
  • Alan Mulally, head of Boeing's commercial aircraft business, said that early delivery slots for the 787 are disappearing quickly, and that the plane is essentially "sold out" through 2010.

Statistics:

  • Shares of Boeing Co. rose 3 percent on Monday to a close of $59.58.
  • The Air Canada order is worth $6 billion, based on list prices.
  • Boeing's stock is up 15 percent this year.
  • The Air Canada order includes 60 of Boeing's new 787 Dreamliners.
  • The airline's current Boeing 767 planes will be replaced by the new 787s.
  • The 787 is expected to reduce fuel burn and maintenance costs by 30 percent.
  • The Air Canada order is subject to several conditions.
  • The first flight of the 787 is expected in 2007, with certification, delivery and entry into service planned for 2008.

Sources:

  • Tim McLaughlin, "Boeing, Air Canada Sign $6 Billion Deal for 787", The Post-Dispatch, [No date mentioned]
  • AP Photo/Courtesy Boeing Co., "In a computer-generated image, Boeing's 777-200LR (top) and 787 fly with Air Canada logos."

Read more