Will Boeing Regain Its Order Momentum This Quarter?

During the first half of 2017, Boeing (NYSE: BA) won a massive number of commercial aircraft orders. As of July 4, the company had captured 381 net firm orders for the year, compared to 276 net firm orders in the first half of 2016.

However, order activity has slowed since then. As of Oct. 17, Boeing's 2017 firm order total had reached 498, an increase of just 117 over the previous 3.5 months. This is probably just a temporary slowdown, though. Boeing has a good chance at surpassing 800 net firm orders by year-end, as it firms up deals negotiated at the Paris Air Show earlier this year.

Boeing has a huge pipeline of aircraft deals

Airlines, leasing firms, and aircraft manufacturers typically announce a slew of deals at the biggest air show of the year. (In even-numbered years, that's the Farnborough Airshow; in odd-numbered years, it's the Paris Air Show.) It can take a while to firm up all of those deals, though.

Case in point: At the 2017 Paris Air Show, Boeing announced 134 firm orders but a whopping 437 commitments, driven primarily by the launch of the new 737 MAX 10 model. So far, very few of those 437 commitments have been finalized.

In the past few months, more commitments have trickled in. The biggest was a commitment for 40 787 Dreamliners from Turkish Airlines. Just last week, China Southern Airlines announced that it will buy another eight 777-300ERs and 30 737 MAXs from Boeing.

December is crunch time for airplane orders

While Boeing and Airbus rush to line up lots of announcements for the big air shows, finalizing deals doesn't seem to become an urgent priority until the end of the year starts approaching. As a result, a disproportionate number of firm orders are booked in December.

In 2015, Boeing booked about 200 firm orders during the month of December. In 2016, it finalized a similar number of deals just in the last week and a half of the year. In both years, more than a quarter of Boeing's firm orders were booked in December.

2017 is shaping up to be very similar. Including commitments received at the Paris Air Show, announcements from the past few months, and planned aircraft sales to Iran, Boeing has well over 500 outstanding commitments waiting to be finalized as firm orders.

Boeing should build its 737 backlog while it can

As is the case almost every year, the Boeing 737 narrowbody family is driving the bulk of the U.S. aerospace giant's 2017 order activity. It accounts for 360 of the 498 net firm orders booked year to date, and nearly all of the commitments secured at the Paris Air Show.

Many aerospace analysts believe the Boeing 737 will face stiff competition after Airbus takes control of the CSeries aircraft family next year. The CSeries was just designed from scratch by Bombardier, whereas the "new" 737 MAX family is based on an underlying design dating back to the 1960s. Not surprisingly, the CSeries offers a big upgrade over the 737 in terms of fuel efficiency and passenger comfort.

Thus, it's in Boeing's interest to firm up as many 737 deals as possible before Airbus gets its hands on the CSeries. Right now, Boeing is probably moving aggressively behind the scenes to hammer out firm contracts with the companies that recently committed to buy the 737 MAX. As a result, I expect another deluge of orders for Boeing as the end of 2017 approaches.

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