CHICAGO, July 17, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Boeing Co (NYSE:BA-Free Report), Embraer S.A. (NYSE:ERJ-Free Report), Air Lease Corp. (NYSE:AL-Free Report), Delta Air Lines Inc. (NYSE:DAL-Free Report) and CIT Group Inc. (NYSE:CIT-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday's Analyst Blog:
Can Airbus Eat into Boeing 787 Dreamliner Sales?
European plane maker Airbus Group NV launched the revamped twin-aisle long-haul wide-body A330 jet – the A330neo – at the Farnborough International Airshow. The latest reincarnation of the A330 jet is aimed at challenging The Boeing Co's (NYSE:BA-Free Report) preeminent position in the lucrative long-range passenger jet market.
Airbus Group plans to spend over $1.4 billion on the upgrade of its A330 passenger jet to combat the more technologically advanced 787 Dreamliner from Boeing.
A330neo versus 787 Dreamliner
The European manufacturer's new A330neo comes in two versions – A330-800neo and A330-900neo. By making aerodynamics improvements with new Rolls-Royce Holdings PLC Trent 7000 engines, these jets would reduce fuel consumption by 14% per seat. The overhauled units will also increase the range by 400 nautical miles from current models.
The A330-900neo has a basic arrangement of 310 seats and will be introduced in the fourth quarter of 2017, while the 252-seated 800neo will land in early 2018. The A330neo's fuselage as well as wings will be made from conventional aluminum that is considered to be heavier.
In contrast, Boeing's 787 Dreamliner is made up of lightweight and environmentally friendly carbon composites that diminish fuel burn. This was Boeing's trump card, bringing about a welcome change from traditional materials like aluminum and titanium. The Dreamliner carries between 242 and 323 passengers. The 787 family continues to evolve with the 787-9 and 787-10 being the latest versions. The third and longest 787, the 787-10, is in development and set to deliver in 2018.
In addition to bringing big-jet ranges to mid-size airplanes, the 787 provides airlines with superior fuel efficiency, resulting in exceptional environmental performance. The airplane as per Boeing uses 20% less fuel than similarly sized aircraft.
As far as prices are concerned, the A330-900 version will cost $275 million at list prices, which might make it a compelling option. Boeing's 787-10 costs $288.7 million at list prices though customers generally get discounts on bulk orders.
A330neo's capital costs are expected to be 25% lower than the present version. Airbus' executive asserted that it would have 5% lower direct maintenance costs.
Why the Upgrade
This major upgrade will expand the life of A330, which entered into service in 1994. With only 241 more in backlog and about two years' worth of production, the A330neo will give a new lease of life to the A330 wide-body jet. The A330, built at a rate of 10 a month, has been an important profit contributor for Airbus.
Bigger Picture
Boeing and Airbus dominate this typically duopolistic commercial aerospace manufacturing market, with major airlines across the globe using airplanes manufactured by these giants to run their fleet. Canada's Bombardier Inc. and Brazil's Embraer S.A. (NYSE:ERJ-Free Report) are also in the commercial race but their presence in the market is negligible compared to the other two.
While the new Airbus airplane will not be as superior or as fuel efficient as the Dreamliner, it will likely be less expensive. If Airbus can deliver 1,000 aircraft to airlines as well as leasing companies, it might match the orders notched up by the 787 Dreamliner. We note that the 787 Dreamliner has suffered technical problems since entering service in 2011.
Los Angeles-based aircraft leasing groupAir Lease Corp. (NYSE:AL-Free Report) has already ordered for the new jet. The Air Lease will buy 25 A330-900neos and 60 A320neo (the next-generation model of A320 narrow-body). Airbus is also hopeful of winning orders from Delta Air Lines Inc. (NYSE:DAL-Free Report), AirAsia Berhad and CIT Group Inc. (NYSE:CIT-Free Report).
Airbus is confident of selling more than 1,000 of the new version through 2030. The company is betting on the lower purchase and repair cost of its revamped jet to make it a success. Boeing has, however, raised doubts about Airbus' stated potential market for the A330neo. The archrival sees A330neo sales at only 500.
On the other side of the story, the U.S. aerospace giant reported strong delivery numbers for the second quarter as well as the first half of 2014, beating its archrival, Airbus. Its 787 Dreamliner despite setbacks and technical snags remains a popular choice for major airlines, roughly doubling its deliveries in the second quarter of 2014.
Given Boeing's impressive track record in both innovation and fuel efficiency, it's a wait and watch game to see whether the uphauled A330neo can dent Dreamliner sales.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Get the full Report on BA - FREE
Get the full Report on ERJ - FREE
Get the full Report on AL - FREE
Get the full Report on DAL - FREE
Get the full Report on CIT - FREE
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO
SOURCE Zacks Investment Research, Inc.
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article