Every Thursday, every week, Boeing (NYSE:BA) updates investors on the status of its plane orders. Some of these airplanes are more profitable for Boeing, some less.
The good news for investors this week: Boeing just won orders for three of its most profitable planes, and (probably) higher prices on nine units of another airplane model.
Updating the numbers
That's a pretty general and broad-sweeping statement. So let's give you some specifics. Boeing confirmed that through the final week of April it has this year booked orders for:
- 80 single-aisle 737s
- 35 new "Dreamliner" 787s
- 20 units of the 777
- three 747 jumbo jets
- one 767.
Tally those up, and it makes for 139 "gross" plane orders received year to date. Boeing also reported 25 order cancellations, however, so the number of "net" orders for the year now stands at 114 -- three more than last week.
This seems rather a small change at first glance. Here's why it's significant: In summarizing changes to its order book since last week, Boeing noted that an unidentified customer (or customers) placed new orders for nine 737s, while simultaneously nine other 737s were canceled. That sounds fortuitous -- but it's almost certainly not an accident.
Boeing has previously clarified that when its order book shows a certain number of 737 aircraft orders coming from one customer, and an equal number of cancellations, this "almost always" refers to "an NG to MAX conversion" -- that is to say, a customer upgrading its order from current model 737 NG aircraft to pricier 737 "MAXes."
To put this move in context, Boeing currently prices the 737-800 single-aisle jetliner (for example) at $93.3 million. Meanwhile, Boeing's most popular MAX aircraft, the similarly sized, upcoming 737 MAX 8, lists for $106.9 million. Thus, by permitting its unidentified customer to upgrade from one 737 version to the next, presto change-o, Boeing might have upped its revenue from that particular sale by 14.5%!
On top of this feat, Boeing also said it took orders for three units of its most profitable airplane, the 777. Depending on which version it sold (Boeing doesn't go into that level of detail in its order book), those three planes should be worth just under $1 billion ($982 million) at list prices.
The upshot for investors
Add it all up, and the total incremental revenue Boeing booked this past week comes to just over $1.1 billion. For a company that does $60 billion in commercial aircraft sales annually, that actually makes this past week a bit lighter than average for Boeing's revenue stream.
But you know what they say: $1.1 billion here, $1.1 billion there. Pretty soon, Boeing will be making some real money.