United Airlines will buy 100 Boeing 787 Dreamliner jets to replace its aging widebody fleet, seeking to improve costs and drive global growth. BA stock gained in choppy trade Tuesday after ascending into buy range Monday. But UAL stock slid.
Along with 100 firm Dreamliner orders, United has the option to buy 100 more, the companies jointly announced Tuesday. United is also buying 100 Boeing 737 Max narrowbody jets, including 56 new orders and 44 existing options.
The new Dreamliner jets will fly United's longest routes and replace older, less-efficient aircraft.
The huge order from United is a big win for the restructuring Dow Jones aviation giant. It is the "largest 787 Dreamliner order in Boeing history," according to Tuesday's news release.
United expects to take delivery of the new Boeing Dreamliner jets between 2024 and 2032. The new aircraft are expected to deliver 25% improvement in fuel use vs. the older Boeing 767 widebodies and some 777s they will replace, along with improved maintenance costs.
"I look forward to the incremental margin and earnings these aircraft will generate," United CFO Gerry Laderman said in Tuesday's release.
Beginning in the summer of 2023, United is adding more flights to popular international destinations. Commercial air travel continues to recover after the coronavirus pandemic.
United crushed earnings views and also beat on revenue in its latest quarter. For Boeing, commercial aviation offset the defense segment's drag on earnings in the most recent quarter.
A big order had been expected.
The Wall Street Journal reported last week that United was looking to order around 100 planes.
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BA Stock
Shares of Boeing swung between black and red on the stock market today before closing up 0.5% to 187.10. On Monday, Boeing shares popped 3.7%. That pushed BA stock beyond the 5% chase zone from a 173.95 buy point for a cup base.
The Dow stock is still in buy range above an alternate entry near 180 from its recent mini-consolidation.
The relative strength line for Boeing stock is at its best levels since February, a sign of outperformance vs. the S&P 500 index.
UAL stock dived 6.8% to 41.17 Tuesday, undercutting its 50-day line. Shares rose 2.8% Monday to 44.24. A November inflation report Tuesday showed that underlying inflation posted its smallest monthly gain in more than a year. Prices for airline tickets fell 3%.
The major indexes closed higher Tuesday on a cooler inflation report, scoring their second consecutive day of gains.
Boeing Eyes Air India Deal
Meanwhile, on Sunday sources told Reuters that Air India is close to ordering 500 jetliners worth tens of billions of dollars from both Boeing and Airbus.
The order would rank "among the biggest by a single airline in volume terms," the news report said. It would even overshadow "a combined order for 460 Airbus and Boeing jets from American Airlines over a decade ago."
Air India is undergoing a financial restructuring after diversified, privately held Indian heavyweight Tata Group regained control of the airline in January. Tata Group is also the parent Tata Motors.
The timeline for an official announcement of the order is unclear. But Reuters said sources sought anonymity because "finishing touches are (expected to be) placed on the mammoth deal in coming days."
Airbus shares rose 0.8%, notching their fourth straight day of gains. TTM shares advanced 1.7%, but still below the 50-day moving average.
India is the world's fastest-growing air travel market, according to Reuters.
At an investor day on Nov. 9, Boeing gave a free cash outlook well above Wall Street's estimates on expectations for rising jet deliveries. That lifted BA stock more than 5% the next day.
During the pandemic, Boeing suffered from the collapse in commercial and business air travel, which pounded BA stock. That compounded the grounding of the global 737 MAX fleet following two fatal crashes in 2018 and 2019. The company also faced setbacks to key defense programs.
Now, recession fears and supply disruptions are rippling through industrial manufacturing chains, including airlines.
