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The Boeing Company (BA)’s Contract with Ryanair Holdings plc (ADR) (RYAAY) a Harbinger of Strong Demand

The Boeing Company (NYSE:BA)’s recent deal with Ryanair Holdings plc (ADR) (NASDAQ:RYAAY) for 100 Boeing 737 MAX’s, which has pushed their stock up 2% this week, is likely only a harbinger of continued future growth in the single-aisle jet market. Speaking to Bloomberg in Hong Kong on Wednesday, Randy Tinseth, the VP of Marketing for The Boeing Company (NYSE:BA)’s airplane unit extolled the virtues of the 737 model for low-cost carriers and their passengers.

Boeing BA Airplane 737

“Well what we’re trying to do is provide a vehicle, an airplane for our customers that will allow them to be who they are. Ryanair is an airline that focuses on low fares, no frills, they’ve been able to grow, and they provide passengers what they want: more frequent non-stop service at low prices. It’s all about helping stimulate travel, it’s all about making it part of our everyday lives,” Tinseth said.

In a press release, Ryanair Holdings plc (ADR) (NASDAQ:RYAAY) CEO Michael O’Leary called the new 737 MAX aircraft, the first of which will be delivered to carriers in 2017, “gamechangers”, that will revolutionize the low-cost airfare industry. The new jets have additional seating for 11 passengers, allowing for up to 200 passengers per flight, while reducing fuel costs by as much as 18% over existing aircraft.

The Ryanair Holdings plc (ADR) (NASDAQ:RYAAY) deal, potentially worth as much as $22 billion if the additional 100 jets on option in the contract are picked up, is a mere drop in the bucket when it comes to The Boeing Company (NYSE:BA)’s expectations for future sales in the aircraft industry. They expect the industry to generate $5.2 trillion in sales over the next 20 years, propelled by strong growth in Asia, particularly in China and India. Tinseth said he expects demand for as many as 1,000 aircraft from India over the next 20 years.

The Boeing Company (NYSE:BA) increased their guidance for fiscal 2014 during reporting of their second-quarter results, raising their core earnings per share guidance to $7.90 to $8.10, from $7.15 to $7.35.

Disclosure: none

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