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Boeing: Wheels Up in 1 Year

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It's been a long time coming, no doubt. But Boeing (NYSE: BA  ) finally provided its investors with some good news yesterday. Two pieces of good news, if you want to be technical -- but they boil down to just one: The 787 Dreamliner project is finally on track.

As you know, Boeing has issued serial warnings of delays in the program, for reasons ranging from management bungling to workers striking. But on Tuesday, Boeing announced that it expects to conduct the first-ever test flight of its aeronautical albatross within the next three months, and if all goes well, start building actual for-sale versions for delivery in Q1 2010. That's nearly two years behind schedule, but hey ...

Better late than never, right?
Delta Airlines (NYSE: DAL  ) seems to think so. Delta, along with fellow airborne people-haulers Southwest (NYSE: LUV  ) , AMR Corp. (NYSE: AMR  ) , and UAL Corp. (Nasdaq: UAUA  ) -- basically, everybody who's anybody in airlines -- reported earlier this week that traffic is in a tailspin. But that didn’t stop Delta from stepping up to the plate to confirm yesterday that it still intends to buy 18 of Boeing's new fuel-sipping 787s. (Guess that run of $150 oil still has 'em spooked.)

Bully for Boeing, but ...
... what's it mean to you, right? Well, if you're a Boeing investor, it means there's at least some evidence that the company's order book isn't evaporating quite as fast as its share price. Right now, Boeing claims 878 "firm orders" for 787s. At the very lowest list price on the plane, that translates into firm commitments by Boeing customers to provide at least $131.7 billion in revenue, just as fast as Boeing can start delivering the goods. (Literally.)

That's enough business to keep the commercial side of Boeing busy for well over two years (at current revenue rates) -- but  it's still only about 38% of the total business Boeing has booked into backlog.

This is key because, historically, Boeing has traded at price-to-sales ratios similar to those of more pure-play defense contractors. These ratios averaged 1.0 a year or so ago, when defense biz was good. But valuations have suffered a half-off sale since President Obama arrived on the scene, and now range from about 0.35 times sales for Northrop Grumman (NYSE: NOC  ) to 0.54 for Lockheed Martin (NYSE: LMT  ) .

Boeing, now at 0.4 times sales, seems to fit neatly into the pattern -- unless its commercial business should prove more resilient than the defense side of the company. Delta's news suggests this could be the situation -- in which case, Boeing just might be as cheap as it looks.

Fool contributor Rich Smith owns shares of Boeing. The Motley Fool has a disclosure policy.

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