Boeing reached an agreement with five Japanese companies to help build its new 777X jetliner, maintaining the share that's made in Japan amid inroads that rival Airbus has made in selling planes to airlines there. The Chicago-based aerospace giant will continue contracts with Mitsubishi Heavy Industries, Kawasaki Heavy Industries, Fuji Heavy Industries and two others to build 21% of the 777X. The work includes the fuselage sections, bulkheads and landing gear.
Boeing shares dipped 0.7% to 133.14 in the stock market today. The company's international supply chain was blamed for delivery delays with the 787, and Boeing has been trying to tighten its operations. The large carbon-fiber wings for the 777X will be built at Boeing's Seattle-area factory, while the 787's wings are built in Japan.
Japanese firms had also built about 21% of the earlier 777. But the 21% share for the 777X is lower than the 35% share of the 787 Dreamliner built in Japan. While Japanese manufacturers want work on the plane, Japanese airlines don't want such a big piece of the 777X. Japan Airlines ordered 31 A350s from Boeing's European rival Airbus after rejecting an offer from Boeing.
But rival ANA Holdings ordered 70 planes from Boeing in March. Boeing has 300 orders for its new 777X. More orders for the new plane expected at the Farnborough Air Show in the U.K. next month. Airlines have been on a buying spree lately to update aging fleets with more fuel-efficient planes.
The Aerospace and Defense group is ranked No. 40 out of the 197 industry groups IBD tracks. Boeing has a 83 out of 99 Composite Rating. IBD's Composite Rating grades stocks in five areas, with extra weight on earnings and stock price strength.
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