Boeing Impresses at Paris Air Show

Boeing Co. (NYSE:BA) was off to a bad start in 2016, but the stock has been performing incredibly well since the beginning of 2017 as it is up approximately 28% year to date. Moreover, it looks like the company’s impressive run will not end anytime soon.

The Paris Air Show kicked off Monday and will run through June 25. As the competition in the airline industry is growing at a rapid pace, customers are demanding lighter, more fuel-efficient planes along with the capacity to carry more passengers for long distances.

On the first day, Boeing launched its largest and most fuel-efficient plane yet in its hugely successful jetliner series. Although the Boeing 737 MAX 9 was incredibly popular, the company has made significant changes in its new MAX 10 aircraft. The MAX 10 is five-and-a-half feet longer than MAX 9. It can seat up to 230 passengers, 30% more than the 178 seats in the MAX 9.

With the launch of the MAX 10, the aircraft manufacturer is competing with Airbus‘ (XPAR:AIR) A321 neo. The company claims the MAX 10 will be 5% more efficient than the A321 neo.

In addition, Boeing said it has already received 240 orders and commitments from at least 10 customers for the new MAX 10 aircraft, with the first models scheduled to take off in 2020.

On the other hand, Airbus launched an upgraded version of the world’s largest passenger jet, called the A380plus. The most significant feature of the plane is its wingtip design, which is aimed at decreasing fuel consumption by up to 4%. In comparison to its predecessor, the A380plus can carry 80 more passengers and has marginally additional range.

Most importantly, Boeing signed a memoranda of understanding (MoU) for more than 200 aircraft on the first day of the show, comprising MAX 10, MAX 8 and 787-9 Dreamliners. In contrast, Airbus signed no MoUs on the first day. In all, Boeing’s total order count came to 308 units, whereas Airbus received an order for just 112 aircraft valued $12.4 billion.

Most orders are placed by customers on the first day. In the following days, the number of orders swiftly declines. Therefore, it looks like Boeing had a much better start compared to rival Airbus.

Conclusion

Currently, Boeing and Airbus are the top two players in the large jet airliner market. Despite stiff competition, Boeing successfully outstripped Airbus on the first day of the Paris Air Show.

Boeing offers a healthy dividend yield of 2.85%, considerably greater than Airbus’ 1.70% dividend yield. Moreover, Boeing currently trades with a price-earnings (P/E) ratio of 24.40, almost half of Airbus’ P/E ratio of 48.56, suggesting it still has massive upside potential.

As an outcome, Boeing appears to be in a better position compared to Airbus. Investors seeking to initiate a position in the stock should wait for a dip, however, as it is currently trading near a new all-time high.

Disclosure: I do not hold a position in the stocks mentioned in this article.