Boeing's 2016 orders
lowest since 2010, deliveries hit target
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[January 07, 2017]
By Alwyn Scott
SEATTLE (Reuters) - Boeing Co <BA.N> fell
80 planes short of its goal for new orders in 2016, but likely clinched
the title of world's biggest planemaker for another year.
Boeing on Friday said it delivered 748 jetliners last year and booked
net orders for 668 aircraft worth about $94 billion at list prices.
Boeing had predicted orders would roughly match deliveries, which it
forecast at between 745 and 750 planes.
Boeing's delivery total likely means the Chicago-based aerospace and
defense company beat European rival Airbus <AIR.PA> on output. Airbus
has forecast at least 670 deliveries in 2016, and is due to reports
totals on Wednesday.
Investors watch orders and deliveries closely to gauge future aircraft
production levels and revenue, since airlines make most of the payment
when aircraft are delivered. Boeing shares were up about 0.1 percent at
$158.86 in mid-day trading.
Airlines have slowed their shopping for jets, especially large widebody
models, causing Boeing's "book to bill" ratio of new sales to deliveries
to fall to its lowest level since 2004.
Even so, Boeing's orders fell less than expected, suggesting aggressive
sales campaigns at year-end, analysts said. Airbus has a price advantage
thanks to the strong U.S. dollar, putting pressure on Boeing's sales
team. Looking to 2017, "it's going to be tough for Boeing not to get
more aggressive on pricing," said Ken Herbert, an analyst at Canaccord
Boeing's deliveries also slowed as the company began building the new
737 MAX narrowbody at its factory in Renton, Washington. The first MAX
planes take longer to assemble than older 737 models, and cannot be
delivered until Boeing finishes flight tests and gets government
Even so, Boeing delivered two more 737s in the latest quarter than in
the same quarter of 2015. "That says something about the production
system," said Howard Rubel, analyst at Jefferies.
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Boeing facilities are seen in Los Angeles, California, U.S. April
22, 2016. REUTERS/Lucy Nicholson/File Photo
OUTPUT RISING AS SALES SLOW
Deliveries likely will rise this year as MAX planes that welled up in inventory
are delivered. But the gain will be tempered by a 40 percent cut in production
of 777 widebodies. Analysts expect 777 deliveries will fall to 3.5 a month in
2018, from 8.3 currently, as the successor 777X model enters production.
"What we'll be interested to hear is whether (Airbus and Boeing) expect orders
to continue to decline in 2017 at the same time that they are raising
production," said Rob Stallard, analyst at Vertical Research Partners.
The forecasts are typically released with fourth-quarter results.
The final days of 2016 marked a busy time for Boeing's new sales chief Ihssane
Mounir. The sales force booked 198 net new orders since Dec. 20, including 189
orders from unidentified customers. The tally did not include any of its pending
orders for Iran, the company said.
The total included 194 orders worth about $21 billion at list prices for
Boeing's 737 MAX. It also included an order for four 787 Dreamliners from
Boeing had already disclosed a large part of the tally earlier in the week, when
it said it booked 80 orders for its 737 MAX.
The new tally lifts Boeing's total backlog to 5,715 commercial jets, equivalent
to about seven years of production, the majority of which are 737 planes. Sales
of more expensive widebodies such as the 777 and 787 remain sluggish.
(Reporting by Alwyn Scott; Editing by Meredith Mazzilli and Chizu Nomiyama)
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