Market News

Boeing to Initiate Three New Freighter Conversion Lines

Amid the rising global demand for freighters, Boeing (BA) has revealed its plans of commencing three conversion lines for 737-800BCF across North America and Europe. The aviation, aerospace and defense technology company has also bagged an order from Icelease, an aircraft lessor, asset management and trading platform, for the supply of eleven freighters from one of the new lines.  

The 737-800BCF is the standard body freighter with over 200 orders from 19 customers. Its higher reliability, lower fuel consumption, reduced operating costs per trip and technical support differentiate the 737-800BCF from other standard-body freighters. 

The director of Boeing Converted Freighters, Jens Steinhagen, said, “Building a diverse and global network of conversion facilities is critical to supporting our customers’ growth and meeting regional demand. KF Aerospace and our Boeing teammates at London Gatwick have the infrastructure, capabilities and expertise required to deliver market-leading Boeing Converted Freighters to our customers.” 

New Conversion Lines Details 

Boeing is likely to open one conversion line at its London Gatwick Maintenance, Repair & Overhaul (MRO) facility in the United Kingdom in 2022. Additionally, the other two conversion lines are expected to commence in 2023 at KF Aerospace MRO in Kelowna, British Columbia, Canada.

Markedly, the order from Icelease indicates the first converted freighter order for Boeing from the company’s London Gatwick MRO facility. (See Boeing stock charts on TipRanks) 

Earlier in 2021, Boeing disclosed that additional 737-800BCF conversion capacity will be created at several sites, which included a third conversion line at Guangzhou Aircraft Maintenance Engineering Company Limited (GAMECO), and two conversion lines with a new supplier, Cooperativa Autogestionaria de Servicios Aeroindustriales (COOPESA) in Costa Rica in 2022. On activation of new lines, Boeing will have conversion sites in North America, Asia and Europe. 

Boeing’s Estimations 

Boeing estimates that the rising demand will create the need for 1,720 freighter conversions over the next 20 years. Notably, the demand is expected to include 1,200 standard-body conversions with about 20% demand coming from European carriers, and 30% from North America and Latin America. 

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Wall Street’s Take 

Recently, Jefferies analyst Shelia Kahyaoglu reiterated a Buy rating and a price target of $300 (35.77% upside potential) on the stock. 

The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 9 Buys and 5 Holds. The average Boeing price target of $266.07 implies 20.42% upside potential. Shares have increased 9.2% over the past year. 

Bloggers Weigh In 

TipRanks data shows that financial blogger opinions are 70% Bullish on BA, compared to a sector average of 71%.

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