The Paris Air Show is always a forum for big aircraft order announcements, and the competition between Boeing (NYSE:BA) and Airbus is usually intense. The order frenzy last week wasn't quite as dramatic as in the past two installments of the Paris Air Show, but Boeing and Airbus still logged more than $100 billion in new orders at list prices (including letters of intent).
Airbus "won" the order race with orders and letters of intent for planes worth $57 billion at list prices, compared to Boeing's $50 billion. But Boeing investors should still be very pleased with the company's order haul last week.
The order rundown
Boeing bagged 331 total orders and commitments at the Paris Air Show. More than 250 of these orders were for Boeing's popular 737 family of single-aisle planes, including both current-generation models and next-gen 737 MAX models.
There were also 77 orders for Boeing's widebodies. This included a surprising 20 orders for Boeing's 747 jumbo jet, 36 orders for the popular Dreamliner, and 21 orders for the 777 -- split roughly evenly between the current-generation model and the next-gen 777X.
While the 737 order total was impressive, Boeing already had 4,170 unfilled orders as of May. Based on its current production rate of 42 aircraft per month, this represents more than 8 years of production. Boeing does plan to increase the production rate to 47 per month next year and 52 per month in 2018. Even so, it has already booked most of its next six years of production.
In other words, Boeing clearly doesn't have to work too hard to sell 737s. That's why its widebody orders at the Paris Air Show were much more significant -- and impressive.
Selling the less popular planes
Boeing's 787 Dreamliner also has a fairly long backlog of more than 800 planes, good for nearly seven years of production at the current rate. So it's good to see that there is still demand, but increasing production is a bigger challenge than selling more Dreamliners at the moment.
However, one Dreamliner deal was important. Boeing will sell six of its "terrible teens" -- models produced early in the production run that came in overweight and thus have lower-than-advertised range and fuel efficiency -- to Ethiopian Airlines. Those planes have been parked for half a decade, waiting for owners, and now Boeing will finally get paid for them.
The Boeing 747 deal was also very important, as I discussed in an article last weekend. In a single order, Boeing sold more 747s than it had sold in the past several years combined.
The 777 is the X-factor
Boeing's 777 order activity was perhaps the most significant development from a business perspective. That's because the 777 is a big contributor to Boeing's earnings (unlike the 747), but it doesn't have nearly as long a backlog as the 737 or 787 Dreamliner.
At the Paris Air Show, Boeing sold 10 next-gen 777X aircraft to Qatar Airways. That brings its order total for the 777X -- scheduled to enter service in 2020 -- to 296, or roughly three years of production. That's a healthy number, considering that the first delivery is still five years away.
With the highly efficient 777X in the pipeline and the 787-10 (a larger Dreamliner variant due in 2018) cannibalizing demand for the smaller version of the 777, it's only going to get harder for Boeing to sell current-generation 777s.
One of its toughest tasks for the next few years will be filling its remaining 777 delivery slots so that it doesn't have to cut production. (For example, Airbus is cutting production of its A330 model from 10/month to 9/month later this year and then to as little as 6/month next year, as orders have slowed ahead of the introduction of a new version in late 2017.)
As of last month, Boeing had 262 unfilled orders for the current-generation 777. At today's production rate of 8.3/month, that represents more than two and a half years of production. In total, Boeing probably needs to sell another 250 or so to avoid a significant production cut.
At the Paris Air Show, Boeing secured another 9 orders for the 777 Freighter and 2 for the 777-300ER passenger version. While that's a relatively small drop in the bucket, Boeing does have a few years to fill its remaining 777 delivery slots. Plus, it had already sold more than two dozen 777s this year before the Paris Air Show.
Strong sales figures for Boeing's popular 737 and Airbus' rival A320 family garner the most headlines. But the more important news from the Paris Air Show had to do with sales of the less-popular models. With a solid haul of 777 orders and a surprising large order for the 747, Boeing had a great week in Paris.
Adam Levine-Weinberg owns shares of The Boeing Company. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.