After markets closed on Monday, Boeing Co. announced that it had received two orders for its Boeing Business Jets (BBJs). Two unnamed customers have each ordered one aircraft: a 737-based BBJ and a BBJ 787-8.
The company also won a commitment from a China-based airline and two leasing firms for 60 of Boeing’s 737 MAX aircraft. The Chinese deal includes Ruili Airlines, Minsheng Financial Leasing and Avic International Leasing. The order is worth about $6.1 billion at list prices according to Bloomberg News.
The business jet deal may be the more interesting of the two, not because of its size but because it may signal a turnaround in Boeing’s sputtering business for business jets. Since 1996 Boeing has taken orders for 229 business jets and delivered 209. Of the totals, 164 have been orders for the company’s BBJ and 158 of those planes have been delivered. Among the planes remaining to be delivered are six BBJs, two 737s, two 777s, seven 787s and one 747-8, including the two new orders.
The market for business jets is getting stronger, with the Gulfstream division of General Dynamics Corp. (NYSE: GD) off to a good start already this year, before an announcement Tuesday morning of an agreement from Qatar Executive to purchase up to 30 of Gulfstream’s business jets. The Qatar Executive order includes Gulfstream’s new G500 and G600, as well as the G650ER. The G500 is expected to enter service in 2018 and the G600 is scheduled to follow 12 to 18 months later.
Gulfstream’s backlog is reportedly valued at $13 billion. The list price for a G650ER is a reported $59.9 million to $65.5 million. The G500 is expected to sell for $43.5 million and the G600 will sell for around $54.5 million.
A Boeing BBJ costs about $65 million, and the other Boeing planes are more expensive still, not including the custom cabin work. At list prices for Boeing’s jets, the backlog is valued at around $3.2 billion.
Boeing appointed a new president of its business jet division late last year and plans to build on the 10 deliveries the group made in 2014 and the 13 planes it delivered. In the first quarter of 2015, BBJ delivered one BBJ and two wide-bodies, a 777-300 and a 787-8. There are also several jets spread among the 18 completion centers in the United States and abroad that perform the custom cabin work for Boeing’s business jet customers.
The company said last month that it is looking at potential for a combination cargo-passenger jet that Boeing calls a “Combi.” The market for the plane would be government or industrial customers that need to transport heavy equipment along with a support team. Mining and oil and gas industries are definite possibilities, but the company will need to find a launch customer before it begins developing such a plane.
It is worth noting that Airbus also offers a line of corporate jets that the company designates with the ACJ prefix. Not to be outdone, Airbus today announced its launch of the ACJneo family following an order for an ACJ320neo from Acropolis Aviation, a British firm that offers “discreet bespoke aviation services.” Airbus noted that it has sold 170 corporate jets to date.
The market for business jets is not large, but it is growing again and the profits are apparently worth the trouble. With Gulfstream, Boeing and Airbus all competing for these high-dollar rides, now might be a good time to start shopping for that private plane we have always wanted.