What This Huge Order Means for Boeing’s Stock

Boeing (NYSE: BA  ) received a huge order from Alaska Air (NYSE: ALK  ) this week for 50 737s, worth $5 billion at list price. Thirty-seven of the planes will be MAXes, a new family of aircraft that's 13% more fuel-efficient than the original 737 model. This is of major importance, considering that fuel can easily exceed 30% of airlines' operating expenses, which underscores a significant problem for the industry today: Because of high fuel costs, airlines have little choice but to spend huge sums of money upgrading fleets to remain competitive. It's no coincidence that every major legacy airline has gone bankrupt -- United, Continental, Delta (NYSE: DAL  ) , and now AMR.

While Alaska Air's recent order is certainly good news for Boeing, it's no game-changer -- the aircraft manufacturer currently has 858 orders lined up for the 737 MAX. That's a backlog of more than $350 billion. The question is, though, will Boeing be able to execute on production? And how quickly? The demand is there, but it's an incredibly tall order to fill.

For the full story, be sure to check out the following video. And whether you're bullish on Boeing or wary of any company even remotely related to the airline industry, it's worth repeating (as we do often here at the Fool) that the best investing approach is to choose great companies and stick with them for the long term. In our free report "3 Stocks That Will Help You Retire Rich," we provide winning wealth-building strategies that every investor should be aware of, and name stocks that could help you to execute those strategies and retire well. If you're interested, simply click here now to keep reading.

 

Andrew Tonner, Brendan Byrnes, and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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