The airline industry is soaring to new heights with recent announcements of massive aircraft orders from major carriers, indicating robust demand and a bullish outlook for aviation. Emirates has made a headline-grabbing move with a $52 billion purchase of 95 Boeing jets, including 55 777-9s, 35 777-8s, and five 787 Dreamliners, further cementing its status as the world's largest operator of Boeing 777s.
United Airlines is also preparing for takeoff with a significant expansion, converting options into firm orders for 50 Boeing 787-9s and placing a new order for 60 A321neos. These aircraft are slated for delivery between 2028 and 2031, showcasing United's confidence in long-term growth.
Air India, under the banner of the Tata Group, has made a historic move by finalizing a purchase of 470 aircraft, valued at $70 billion. This colossal order, split between 250 Airbus and 220 Boeing jets, marks the largest deal in commercial aviation history. It's a strategic play aimed at revitalizing the airline and ramping up its service capacity.
This flurry of orders adds to the already substantial backlog for Airbus and Boeing, which stands at around 12,000 planes. If no new orders were to come in, it would take approximately 13 years for the two aerospace giants to deliver all the aircraft currently on order, a testament to the industry's vigorous pulse.
Amid this boom, investors and industry analysts are turning their gaze towards the stock market, evaluating which companies might reap the benefits of this sustained demand. While investing in Boeing or Airbus might seem like an obvious choice, their diverse business portfolios extend beyond aviation, diluting the impact of aircraft sales on their overall financial performance.
This strategic lens brings suppliers into focus, particularly those like Spirit AeroSystems (SPR), which boasts a dominant position as the world's leading manufacturer of airplane fuselages. SPR's critical role in fulfilling the requirements for the backlog of Boeing and Airbus orders puts it at the center of the aviation supply chain.
However, despite its pivotal role, SPR's shares have plummeted by over 70% since the pre-COVID era, largely due to supply chain disruptions that slowed production and led to share dilution and debt accrual. The silver lining appears in the form of new leadership: Patrick Shanahan, the former Secretary of Defense and a Boeing veteran with over 30 years of experience, has stepped in as SPR's CEO. His extensive expertise in supply chain operations could be the catalyst for a corporate revival.
Shanahan's defense background, combined with his intimate knowledge of Boeing's operations, makes him a formidable figure capable of steering SPR through turbulent times. As the industry's trajectory points skyward and SPR sits on a backlog that could keep its production lines busy for years, the question on many minds is whether SPR is poised for a significant comeback.
As always, the future of stocks like SPR is uncertain and hinges on multiple variables, including the ability of companies to navigate supply chain issues, global economic conditions, and the ever-evolving landscape of air travel demand. Whether SPR and similar suppliers can capitalize on the industry's momentum remains to be seen, but with seasoned leadership and a substantial order book, they may just be ready for takeoff.
Disclosure: The content is for informational purposes only; you should not construe any such information as investment, financial, or other advice. I have no business relationship with any company whose stock is mentioned in this article.