Update Boeing (BA)

03/23/2011 1:58 pm EST


Jim Jubak

Founder and Editor, JubakPicks.com

Boeing (BA) successfully conducted its first test of the new bigger passenger version of it 747-8 airplane today. The problem is there may not much of a market for the plane.

It’s not surprising that first flight of the 747-8 went without a hitch. The freight version has already logged 2,000 flights.

The 747-8 is bigger than the current 747-400—and that could be a big problem for Boeing. The new plane would carry 467 passengers, 51 more than the current 747 model, but sales have lagged. Airlines are telling Boeing that in current industry conditions Boeing’s 365-passenger 777-300ER is closer to the size of plane they can fill reliably on most routes. Boeing recently upped planned production on that plane to 100 a year by 2013 in an effort to keep up with demand.

Boeing may do better in the freight market with the 747-8. The plane will carry 36 standard LD-3 freight containers in its cargo holds. That’s six more than the current 747 giving the 747-8 the capacity to carry 37,000 more pounds of cargo, even with a full passenger load.

As of March 23 I'm leaving my target price at $83 a share.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. The fund did own shares of Boeing as of the end of January. For a full list of the stocks in the fund as of the end of January see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/



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