Boeing's (BA) big results on Wednesday morning were aided by some of the manufacturers smaller passenger plane offerings.
Shares of the plan-producer soared on Wednesday after a blockbuster earnings release that was helped in no small part by strong sales of commercial airplanes. Boeing stock closed up 6.3% to $387.72.
Commercial Airplanes fourth-quarter revenue increased to $17.3 billion and reflected higher volume sales on 737 models and higher margins on 787 offerings. The volume on the 737 models was particularly notable as the company sold 580 of the planes in 2018, nearly five times the next most popular model in the 787.
"Boeing has the 737, that's the money plane," Action Alerts PLUS portfolio manager Jim Cramer said. "It is a favorite of the airlines, they make a ton of money off of it. They've got a big backlog on it."
Indeed, the backlog on the plane is big, as nearly 6,000 planes in total are on backorder, led by the smaller 737 model and is even pressuring Boeing's ability to keep up.
"The 737 program added 13 new customers during the year, and the MAX family surpassed 5,000 net orders in December," CEO Dennis Muilenburg told analysts on the comapny's earnings call. "We continue to assess the market upward pressure on the 737 production rate. As with all rate increases, we continue to assess the supply chain readiness as well as the market demand in an integrated manner as part of our disciplined decision-making."
This could be set to foment as consumers in emerging markets gain purchasing power to purchase tickets to travel.
Leveraging Low-Cost Airlines
According to Statista, the company delivered 50 new 737 aircrafts to Ryanair alone in 2018, generating serious profits from the Dublin-based discounter for Boeing.
As the industry has shifted more towards high volume consumer travel at lower costs, even big name players have jumped in on the trend, with major orders from United Airlines (UAL) and Delta Air Lines (DAL) buoying the pipeline.
The simple design and high passenger capacity seems to be key to keeping profits as price on flights are curbed.
The reliance on the smaller model also helps the company work on its next generation of planes to advance beyond its 787 Dreamliner.
The rumored project, which is being informally dubbed the 797, is aimed at competing with chief European competitor Airbus (EADSY) . An announcement is expected to come by the Paris Air Show in mid-summer, as a statement on Airbus' home turf.
Still, the key for Boeing's bullish outlook could be its workhorse smaller planes, not the headline grabbing monsters.
Airbus, of course, is a huge factor in the market share debate for Boeing bulls.
"Overall, we think Boeing is taking market share from its main competitor Airbus and is well-positioned with strong commercial and military demand," said CRFA's Jim Corridore in a statement.
Despite the focus on the big-craft competition, Boeing's hallmark 737 planes should continue to act as the real bulwark against Airbus based on backlog figures.
This is especially true as Airbus' larger flagship planes remain too large for many regional airports and discounters begin to drive the industry.
Airbus currently operates the world's largest plane and six of the ten largest passenger aircraft in circulation, displaying their focus on the mantra that bigger is better.
Boeing, and its investors, seem to be finding that good things come in small packages.