Weakening oil prices could act as a break for the placement of orders of new aircrafts.
As per a report that appeared yesterday in Barron, a financial news weekly, Boeing stock is vulnerable to fall as much as 15% from its current prices, if the demand for aircrafts weakens.
As per the publication, leasing companies and airlines are trying to gain maximum mileage out of existing planes and are delaying the placement of orders for new aircrafts.
It went on to say that low oil prices have also weakened the demand for more fuel-efficient aircrafts.
Nearly two-thirds of Boeing’s revenues are generated from the sale of commercial aircrafts and the remainders from its defence business.
The demand for Boeing’s 737 jets have remained strong despite strong competition from the likes of Bombardier Inc. and Airbus Group SE.
As per Barron, its 777 and 787 models face a significant risks due to high initial costs and slow offtake in its sales. Boeing’s 787 could face a write-off.
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