AviLease to expand fleet with up to 30 Boeing 737-8 jets

RIYADH - AviLease, the global aircraft leasing company based in Saudi Arabia, has entered into a landmark agreement with Boeing [NYSE: BA], placing an order for 20 737-8 airplanes with options for an additional 10 jets. The deal, which marks AviLease’s first direct purchase from an aircraft manufacturer, aims to bolster its portfolio with the latest generation of fuel-efficient aircraft. Boeing, currently trading near its 52-week high with a remarkable 42% gain over the past six months according to InvestingPro data, has shown strong momentum despite operational challenges.

Edward O’Byrne, CEO of AviLease, expressed confidence in the transaction as a reflection of the company’s growth strategy and its recent investment grade ratings. "These new aircraft will accelerate our growth and enable us to deliver the industry’s latest generation, fuel-efficient fleet solutions," O’Byrne said, acknowledging Boeing’s role in fostering a strong, long-term partnership. As a prominent player in the Aerospace & Defense industry, Boeing maintains a moderate debt level, though InvestingPro analysis indicates current profitability challenges with negative EBITDA of $7.69 billion in the last twelve months.

The order is in line with Saudi Arabia’s strategic vision to become a global aviation hub, with the goal of serving 330 million passengers and attracting 150 million visitors annually by the year 2030. The addition of the 737 MAX aircraft to AviLease’s fleet is expected to support this national objective.

Brad McMullen, Boeing’s senior vice president of Commercial Sales and Marketing, highlighted the significance of the partnership with AviLease and the benefits of the 737 MAX, including its fuel efficiency and versatility. McMullen emphasized that these attributes are set to contribute to AviLease’s profitable expansion and the sustainability goals of its airline customers.

The Boeing 737 is a mainstay of the leasing industry, accounting for about 30% of all financed airplanes due to its large customer base and low operating costs. The 737-8 model, in particular, is renowned for its fuel efficiency, a critical factor in the aviation industry’s push toward more sustainable operations.

This strategic move by AviLease and Boeing underscores the ongoing demand for new, efficient aircraft in the leasing market and points to the industry’s recovery and growth. While analysts anticipate sales growth for Boeing in the current year, InvestingPro data reveals the company’s current valuation may be stretched relative to its Fair Value. Investors seeking deeper insights can access comprehensive analysis and 10 additional ProTips through InvestingPro’s detailed research reports. The information for this article is based on a press release statement and InvestingPro data.

In other recent news, Boeing has been actively engaging in strategic developments and partnerships. Boeing received an order from China Airlines for 14 Boeing 777 planes, including 10 passenger and four freighter models, with options for additional purchases. Meanwhile, Boeing is exploring the integration of Saudi Arabia into its global supply chain for the F-15EX fighter jet, as confirmed by Boeing official Michael Strosnider. Analyst firms have shown confidence in Boeing’s prospects, with Barclays maintaining an Overweight rating and a $210 price target, citing increased 787 Dreamlifter deliveries. Bernstein upgraded Boeing’s stock rating from Market Perform to Outperform, raising the price target to $218 based on improved growth prospects and production guidance. Boeing’s production of the 737MAX is projected to reach 38 units per month by July, with potential further increases contingent on FAA collaboration. Additionally, Boeing plans to increase 787 production to seven units per month by year-end, having addressed previous quality issues. These developments highlight Boeing’s efforts to enhance its operational capabilities and market position.

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