Can you tell the global economy is improving? By the looks of the orders placed at the 2017 Dubai Air Show, it's clear the world sentiment is more optimistic.
Boeing (BA) - Get Free Report had a few notable deals during the show's week-long stretch on its way to notching roughly $50 billion in new orders. Meanwhile, Airbus (EADSY) - Get Free Report achieved a new record deal for itself, signing an agreement for an order worth nearly Boeing's total haul for 430 A320neos planes.
Talk about impressive. Between Boeing's deal and Airbus' mega-deal, we're talking nearly $100 billion worth of plane orders at list price. Granted, airlines usually receive discounts to lower those burdens, but the point is still the same: Buyers are cracking open their wallet.
Taking a closer look at Boeing, the company secured a $15.1 billion order with Emirates for its 787-10 jets, which will begin delivery in 2022. It sealed another order with flydubai for $27 billion.
On Oct. 25, Boeing reported fiscal third-quarter earnings. It booked a net increase of 117 orders, pushing its backlog to a staggering 5,700 planes valued at $474 billion. With the recent orders from the Dubai Air Show, that figure is assumed to have eclipsed the $500 billion mark by a healthy margin.
It will take years for Boeing to work through this large of a backlog -- even if for some reason it loses orders along the way.
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The new orders are a testament to how economic leaders feel about the future. With deliveries slated to take place years from now -- even into next decade -- those making these multi-billion-dollar decisions need to have confidence the economy will be strong enough to continue supporting increased air travel. As the economy improves and the population grows, the theory is that more consumers will continue to fly. As businesses feel better about operations, they will take more business trips.
The increase for flying drives up demand for new planes and who else benefits more than Airbus and Boeing? Honeywell (HON) - Get Free Report , United Technologies (UTX) - Get Free Report , General Electric (GE) - Get Free Report and Arconic (ARNC) - Get Free Report are just a few parts suppliers that should benefit as well.
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.