Boeing Shares Jump on Jet Deal

Boeing (BA Quote - Cramer on BA - Stock Picks) shares Wednesday touched a level last seen before the World Trade Center attacks, after it announced that Singapore Airlines had ordered $7.4 billion in aircraft.

Singapore Air, notable as Asia's most profitable carrier, will purchase as many as 31 Boeing 777s, which are used on long-haul and international flights. Between 2006 and 2010, the carrier plans to take delivery of 18 plans, with options to purchase the remaining 13. The contract is a big win for Boeing, which was competing against rival Airbus, unit of EADS, for the order.

In reaction, shares of Boeing rose $1.79, or 3.5%, to $52.70, hitting a peak of $52.82 during the day, the highest since Aug. 28, 2001.

Nine months ago, Boeing shares were more than $10 cheaper than today, because the aerospace giant had fallen behind Airbus to become the No. 2 commercial jetmaker. At the time, the company was embroiled in an ethics scandal that caused its former CEO to resign, marring the company's reputation in Washington, D.C.

But with new CEO and old Boeing veteran Harry Stonecipher at the helm, Boeing has worked to repair its image and become more competitive in the commercial business -- and the effort is showing results.

When Boeing released second-quarter earnings three weeks ago, the company's commercial jet unit surpassed Wall Street expectations because of higher-than-expected sales of the 777, which has higher profit margins than other planes. While overall sales in the commercial unit were down 3% from last year's quarter, profit margins jumped 130 basis points, driving operating earnings up 22%.

And Boeing said the commercial airspace looks good going forward, raising guidance for 2005 when it released earnings. The company has also released a report saying it expects there will be a $5.2 trillion market for new commercial aircraft and aviation services over the next 20 years, with carriers investing $2 trillion on as many as 25,000 new jets.

Boeing's boost is also good for the economy. In Wednesday's release of the durable-goods report for July, orders in the commercial jet space were more than double June's tally, helping overall transportation-related orders show a 5.6% gain for the month.