BA Boeing Co

By Doug Cameron and Imani Moise 

Boeing Co. on Friday reported its weakest year for new commercial-jet orders since 2010 in a sign that the prolonged boom in aircraft sales is drawing to a close.

The world's largest aerospace company by sales closed 2016 with 668 net new orders worth $94.1 billion at list price, missing its goal of matching new deals with deliveries as it shipped 748 jets over the year.

Rapid growth in air travel in Asia and the arrival of new more-fuel-efficient jets, just as oil prices started to rebound, fueled demand from airlines and leasing companies for planes from Boeing and rival Airbus SE.

However, growth has cooled, particularly for larger twin-aisle jets used for international flights, leading both companies to trim production of those models.

Boeing still has a backlog stretching out for seven years of production and this week added deals for almost 200 new jets secured in the final days of last year. The late surge lifted its book-to-bill ratio -- which measures incoming orders against deliveries -- to 0.9.

"To many investors, a book-to-bill [below one] is traditionally the end of the cycle," said Buckingham Research analyst Richard Safran.

The Chicago-based plane maker had 768 net new jet orders in 2015 and an average of more than 1,300 in each of the prior three years as the boom lasted longer than previous industry cycles. Airline profits and jet purchases are closely tied to global economic growth, which in turn fuels passenger and cargo traffic.

The sluggish pace of new orders in the second half of last year led most investors to expect Boeing to miss its internal target of matching orders and deliveries, with more attention focused on its ability to deliver more jets as it prepares to boost output of its best-selling 737 single-aisle jets.

The company secured deals for 848 new jets last year but had cancellations for 180, the majority of them from customers switching to the new 737 Max model that is due to start operating later this year.

Boeing has yet to book an 80-plane contract completed with Iran Air in December, citing the need for further government approvals.

Airbus plans to include a 100-plane deal with Iran Air in its 2016 tally, due to be released on Jan. 11. Analysts expect the European manufacturer to have secured orders for around 600 jets last year compared with 1,080 in 2015.

While carriers such as Southwest Airlines Co. and Turkish Airlines have deferred some deliveries, Boeing executives have said such moves remain below their historical average.

Airlines pay the bulk of an aircraft's price on delivery, and Boeing's 748 deliveries last year compared with 762 in 2015.

The new 737 Max is central to Boeing's expansion plans, and unlike the 787 Dreamliner, its development has been relatively smooth. Norwegian Air Shuttle ASA expects to take its first planes in May, well ahead of Boeing's original target of delivering the initial planes by the third quarter. Southwest Airlines also expects to receive the planes this year.

Write to Doug Cameron at doug.cameron@wsj.com and Imani Moise at imani.moise@wsj.com

(END) Dow Jones Newswires

January 07, 2017 02:48 ET (07:48 GMT)

Boeing (NYSE:BA)
Historical Stock Chart
From Mar 2024 to Apr 2024

Boeing (NYSE:BA)
Historical Stock Chart
From Apr 2023 to Apr 2024