SANTIAGO - LATAM Airlines (NYSE:LTM) Group has bolstered its fleet with an order for 10 Boeing (NYSE:BA) 787-9 Dreamliners, with the option to acquire five additional aircraft, as announced today. This purchase from Boeing [NYSE: BA] underscores the group's commitment to modernizing its offerings with more fuel-efficient planes.
The South American airline group, which currently operates 37 Dreamliners, plans to increase its fleet to 52 by the year 2030. The 787-9 model is celebrated for its fuel efficiency, reducing fuel use and emissions by 25% when compared to the airplanes they replace. This aligns with LATAM's strategy to grow sustainably while lessening its environmental impact.
Ramiro Alfonsín, Chief Financial Officer of LATAM Airlines Group, highlighted the efficiency of the Boeing 787, stating that the new order supports the airline's sustainable growth and enables the launch of new routes, such as the nonstop flight to Sydney. The airline expects to receive at least two aircraft annually from 2025 until the end of the decade.
Boeing's vice president of Commercial Sales for Latin America and the Caribbean, Mike Wilson, expressed gratitude for LATAM's trust in the 787 Dreamliner family. He emphasized Boeing's commitment to supporting LATAM's expansion as air travel demand increases.
The 787 Dreamliner has been instrumental in launching over 400 new nonstop routes since its debut in 2011 and has contributed to a significant reduction in carbon emissions. Boeing's 2024 Commercial Market Outlook predicts that air travel in Latin America will more than double in the next two decades, necessitating nearly 2,300 new airplane deliveries.
This order comes at a time when Boeing forecasts a robust growth in the Latin American aviation market, anticipating a 5% annual increase in air travel and a significant expansion of the region's fleet by 2043.
The information in this article is based on a press release statement from Boeing.
In other recent news, Boeing Co . has initiated a $5 billion share offering and an offering of 90 million common shares. These actions aim to strengthen the company's financial position amid ongoing challenges, such as a prolonged workforce strike and efforts to maintain its investment-grade credit rating. The company has also raised over $15 billion through the sale of common shares and mandatory convertible bonds, following a rejection of their offer to resolve the strike by machinists.
In addition to these financial maneuvers, Boeing is considering the sale of its space business, including its NASA-related operations. This potential divestment comes as the aerospace industry faces both challenges and opportunities in the space sector.
On the labor front, Boeing employees are seeking the reinstatement of traditional pension plans, a move that could strain the company's financial condition. The company's resistance to reverting to the previous pension structure is driven by a need to control long-term pension liabilities.
These are recent developments that reflect Boeing's response to the complex challenges it faces. The company's financial maneuvers are guided by a consortium of financial institutions, including Goldman Sachs (NYSE:GS) & Co. LLC, BofA Securities, Citigroup, and J.P. Morgan. Despite these efforts, credit rating agencies have warned that Boeing's ratings may be downgraded if it does not address its maturing debt.
InvestingPro Insights
While LATAM Airlines Group's order for Boeing 787-9 Dreamliners signals confidence in Boeing's products, the aerospace giant faces significant challenges. According to InvestingPro data, Boeing's revenue for the last twelve months as of Q3 2023 stood at $73.29 billion, with a concerning revenue growth decline of 3.25% over the same period.
InvestingPro Tips highlight that Boeing "may have trouble making interest payments on debt" and "suffers from weak gross profit margins." These factors could potentially impact Boeing's ability to fulfill large orders and maintain profitability in the long term. The company's gross profit margin for the last twelve months as of Q3 2023 was a mere 3.62%, reflecting the financial strain it's under.
Despite the positive news of LATAM's order, Boeing's stock has been under pressure. An InvestingPro Tip notes that the "stock price movements are quite volatile," and the company is "trading near 52-week low." This volatility could be attributed to the ongoing challenges in the aerospace industry and Boeing's internal struggles.
It's worth noting that InvestingPro offers 12 additional tips for Boeing, providing a more comprehensive analysis for investors interested in the company's prospects. These insights could be particularly valuable given the complex nature of the aerospace industry and Boeing's current position.
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