Boeing Wins Major Order from Qantas, Boosting Share Prices

Strategic Insights -

Boeing, the US aircraft maker, has won a significant order from Qantas, the Australian flag carrier, for up to 115 of its mid-sized, long-range 787 Dreamliners. This victory is seen as a major coup for Boeing, with the order potentially worth around $18bn at list prices and before heavy discounts. The win marks a resurgence in Boeing's fortunes in the commercial aircraft market, after a series of key deals for wide-body, long-haul jets, including orders from Cathay Pacific and Emirates.

Key Takeaways:

  • Boeing won a major order from Qantas for up to 115 of its 787 Dreamliners, with the potential value of the deal reaching $18bn.
  • The order marks a significant victory for Boeing in the commercial aircraft market, with the company poised to outsell Airbus this year for the first time since 2000.
  • Boeing has outperformed the S&P 500 by more than 30% this year, with its share price rising to a record high of $71.70 during intraday trading.
  • The Qantas order is part of a surge in new orders for commercial aircraft, with this year expected to be a record one for new orders.
  • Boeing's competitor, Airbus, has a larger order backlog, but its parent company, EADS, has seen its share price close to its all-time high of $33.08.
  • Boeing has secured several key deals in recent weeks, including orders from Cathay Pacific and Emirates.
  • Qantas has shelved plans to order ultra long-haul aircraft, citing profitability concerns.
  • Geoff Dixon, Qantas chief executive, stated that the decision to order the 787 was based on a mixture of price, availability, and fuel efficiency.
  • Boeing and Airbus both offered substantial discounts to win the Qantas order, delaying the board's decision by a week.

Statistics:

  • Up to 115 Boeing 787 Dreamliners ordered by Qantas.
  • Potential value of the deal: $18bn at list prices and before heavy discounts.
  • Boeing's share price rose to a record high of $71.70 during intraday trading.
  • Boeing has outperformed the S&P 500 by more than 30% this year.
  • This year expected to be a record one for new commercial aircraft orders.
  • EADS (Airbus's parent company) share price closed 3 cents lower at $32.75, but was still close to its all-time high of $33.08.
  • Qantas has purchase rights for an additional 50 787s.

Sources:

  • The Financial Times, August 19, 2005 (p. 25)
  • The Australian, August 19, 2005 (p. 1)
  • Reuters, August 18, 2005 (10:35 PM EST)