Key insights
- Boeing has delivered the first two 787 Dreamliners to Riyadh Air, marking a significant step in fulfilling a large order and supporting Saudi Arabia's aviation expansion goals. This news, coupled with a recent US Department of War contract, provides a positive, albeit modest, signal for Boeing's stock and the aerospace sector. While the deliveries are a positive operational milestone, the company's current valuation and thin profit margins suggest a limited immediate impact on broader US equity markets.
RIYADH, Saudi Arabia - Boeing Co. (NYSE:BA) delivered the first two 787 Dreamliner aircraft to Riyadh Air, marking the initial deliveries from an order for up to 72 jets, according to a press release statement issued Thursday.
The aircraft arrived in Riyadh as the new Saudi carrier prepares to launch commercial service. Riyadh Air CEO Tony Douglas said the delivery represents a milestone for the airline as it builds operations from the Kingdom.Boeing, a prominent player in the Aerospace & Defense industry with a market capitalization of $171 billion, has seen its stock trade at $217.42 amid strong revenue growth of 33% over the last twelve months. The company’s gross profit margins remain thin at 4.8%, and analysts don’t anticipate profitability this year. According to InvestingPro analysis, the stock currently appears overvalued relative to its Fair Value.
The deliveries support Saudi Arabia’s aviation strategy targeting 150 million visitors and 330 million passengers annually by 2030. Riyadh Air’s fleet plan centers on the 787 aircraft to connect the Kingdom to regional and long-haul markets across Europe, Asia, Africa and North America.
Riyadh Air plans to serve more than 100 destinations by 2030. The carrier will deploy early 787 flights to cities including London, Cairo and Jeddah, operating both regional and long-haul routes with the 787-9 variant.
Stephanie Pope, president and CEO of Boeing Commercial Airplanes, said the 787 Dreamliner provides the carrier with efficiency and route flexibility.
The deliveries represent the start of fulfillment for Riyadh Air’s order of up to 72 Boeing 787 aircraft. The carrier is establishing a new hub in Riyadh as part of the Kingdom’s broader aviation expansion plans.
In other recent news, Boeing has been awarded an $855 million contract modification by the U.S. Department of War for the production and delivery of four P-8A Lot 13 aircraft. This contract also includes updates for software integration and hardware for the Navy and Foreign Military Sale customers. The Federal Aviation Administration is expected to certify Boeing’s 737 MAX 7 this summer, with the larger MAX 10 model anticipated to receive approval by the end of the year. Additionally, Boeing has announced a partnership with Gilat Satellite Networks to offer in-flight connectivity solutions using Gilat’s Sidewinder antenna. This collaboration is set to enhance broadband connectivity for airlines.
Furthermore, Boeing is under investigation by the German Federal Bureau of Aircraft Accident Investigation following a nose gear collapse of a Boeing 787 at Frankfurt airport. The agency plans to release an interim report in eight weeks. In another development, China’s top economic planning official has expressed support for Boeing’s efforts to deepen commercial ties with Chinese companies. This follows a meeting between Boeing’s CEO and the chairman of China’s National Development and Reform Commission during a U.S. presidential visit to China.
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