Aircraft purchases are on the rise and that creates a positive environment for BE Aerospace (BEAV), one of the world’s biggest manufacturers of jet cabin interiors and a leading distributor of aerospace fasteners.
Even with the global economic recovery in a tenuous state, American Airlines announced in July that it will buy at least 460 new planes over the next five years, representing the biggest single passenger jet order in history. American will spend up to $40 billion on the jets.
In January, China announced it will purchase 200 Boeing jets for $19 billion. And in June, it announced the acquisition of 88 Airbus jets for $7.5 billion.
The buying will certainly benefit BE Aerospace. In February, the company announced that several leading Chinese airlines, including Air China, China Southern Airlines, and Hainan Airlines, agreed to pay about $200 billion for BE Aerospace seating products and its food and beverage preparation and storage equipment.
The Mideast’s burgeoning oil wealth also is proving bountiful to the company, too. In July, three unidentified Middle Eastern airlines agreed to purchase more than $125 million in BE Aerospace products to outfit their new first class suites.
In Europe, the company received more than $100 million in orders from Lufthansa this spring.
All this activity has helped to boost BE Aerospace profits. The company earned $55 million in the second quarter, up a whopping 49 percent from $37 million a year earlier. Revenue jumped 26 percent to $689 million.
"Our second quarter results included record quarterly bookings,” BE Aerospace CEO Amin Khoury said in a statement accompanying the earnings report.
"Based on our record backlog of approximately $6.5 billion, our expectation for continued growth in passenger travel and attendant increases in capacity, and our expectation of significantly higher levels of wide-body aircraft deliveries, we expect the second half of 2011 to be stronger than the first half,” he said.
Analysts are bullish too. Of 15 tracked by Thomson/First Call, 12 have buy or strong buy ratings on BE Aerospace shares. The company next reports around Oct. 25.
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