Boeing (NYSE:BA), the American aerospace giant, has projected a significant demand for new aircraft in the Middle East, with expectations of 3,000 planes needed by 2042. This forecast was shared by Brendan Nelson, President of Boeing, at a media briefing reported by Khaleej Times on Sunday ahead of the Dubai Airshow 2023. The company's vision for the region is part of a broader global need for 2.2 million new aviation personnel.
The announcement comes as the startup airline Riyadh Air, backed by the Saudi sovereign fund, is in advanced talks to acquire up to 100 Boeing 737 MAX aircraft. Today, it was disclosed that an initial order could include 50 planes with additional options, and minor adjustments are anticipated prior to the formal announcement at the Dubai Air Show. This acquisition is in line with Riyadh Air's goal to expand its network and compete with established carriers such as Emirates Airlines and Qatar Airways. It also aligns with Saudi Crown Prince Mohammed bin Salman's objective to transform Riyadh into a global business hub.
Saudi Arabia has been fostering growth in its aviation sector with a new policy launched in October 2023 aimed at attracting investments worth $100 billion by 2030. The General Authority of Civil Aviation announced this initiative supporting airport privatization and introducing new regulations for airport and air transport services.
Earlier this year, in March, Riyadh Air placed an order for a fleet of 72 Boeing's 787 Dreamliners set to launch in 2025 as part of Saudi's economic diversification plans. Additionally, Boeing has been collaborating with Masdar, UAE's leading renewable energy firm, to advance the sustainable aviation fuel industry towards achieving net-zero emissions by 2050. The company has expressed its commitment to invest in research and development and develop industrial partnerships within the region.
Randy Heisey, Boeing’s managing director in Africa and the Middle East region, stated that their Commercial Market Outlook forecast predicts a global demand for 42,595 new aircraft by 2042. Middle Eastern airlines are expected to require 3,025 of these aircrafts, with widebody planes making up 45 percent of this demand. Boeing is actively working with Saudi airlines to implement advanced aircraft technologies as part of this growth trajectory.
InvestingPro Insights
As we delve into the financial health of Boeing (BA), InvestingPro data and tips provide some interesting insights. With a market cap of $123.89B, Boeing is a prominent player in the Aerospace & Defense industry. Despite facing some challenges, the company has seen an impressive revenue growth of 23.34% over the last twelve months as of Q3 2023. However, the company is not profitable over the same period, with a negative P/E ratio of -40.73.
InvestingPro Tips highlight that Boeing's revenue growth has been accelerating, which aligns with its aggressive expansion plans in the Middle East. On the flip side, analysts have revised their earnings downwards for the upcoming period, and the company suffers from weak gross profit margins. These factors, coupled with the fact that the company's price has fallen significantly over the last three months, may give potential investors some pause.
InvestingPro offers additional tips and data for those interested in a more comprehensive analysis of Boeing's financial performance.
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