Boeing Takes $3 Billion Order

After nearly two years of unalloyed bad news (some well-deserved), Boeing Co. (NYSE: BA | BA Price Prediction) announced Thursday morning that it had signed an agreement with private investment firm 777 Partners for 24 of Boeing’s 737-8 (Max 8) single-aisle passenger jets. The Miami-based 777 Partners also has acquired purchase rights for an additional 60 aircraft, although the announcement is not specific regarding which Boeing airplanes are included.

At the list price of $121.6 million per 737-8, the total value of the deal comes to $2.92 billion. Buyers’ discounts typically run between 40% and 60% of the list price.

According to its website, 777 Partners has four companies in its portfolio of aviation firms. One is Canada’s ultra-low-cost carrier Flair Airlines. According to data at Planespotters.net, Flair currently operates three Boeing 737-800 jets with an average age of 10.4 years. Since 2007, the airline has sold or stored another 10 737s.

777 Partners also owns an Asian low-cost carrier alliance consisting of six Asia-Pacific carriers: Cebu Pacific, Cebgo, Jeju Air, Nok Air, All Nippon Airlines, NokScoot and Scoot. As of 2019, the six carriers had a combined fleet of 196 planes and flew to more than 200 destinations in the Asia-Pacific region.

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Joshua Wander, founder and managing partner of 777 Partners, is betting on an upgrade cycle beginning once air travel recovers from the effects of the pandemic:

The retrenchment of traditional carriers globally has created an unprecedented market opportunity for more agile and cost-efficient operators. These aircraft will enable our operators to accelerate the recovery in the destinations they serve. We are humbled to call one of America’s greatest manufacturers our partner in this endeavor.

Boeing’s senior vice-president for commercial sales and marketing, Ihssane Mounir, commented:

This is a significant order that speaks to 777 Partners’ belief in the 737-8 and the market recovery ahead. We look forward to delivering these jets and supporting a safe and successful entry into service with 777 Partners’ affiliates.

Boeing did not say when the 24 aircraft would be added to its order book. That’s the day on which the company can actually begin to book revenue from the order.

Friday’s announcement could be a placeholder for a rumored announcement of a firm order for 130 737 Max 7 jets from Southwest Airlines. A firm order for that many planes would be worth about $13 billion at list prices. The Max 7 is the smallest of the 737 Max family of planes and, until Boeing comes up with something better, the company’s competitor to the Airbus A220, a 150-seater that the European aircraft maker acquired from Canada’s Bombardier.

Boeing’s stock price rose sharply in early premarket trading, but as the opening bell approached, shares were up less than 1%, at $253.74 in a 52-week range of $89.00 to $256.65, a new high posted on Thursday. The stock’s consensus price target is $232.68.

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