Boeing
A United Airlines Boeing 737-900ER plane takes off from Los Angeles International airport (LAX) in Los Angeles, California, March 28, 2018. REUTERS/Mike Blake/File Photo

In 2017, Boeing (NYSE:BA) saw a somewhat surprising uptick in order activity after entering the year with modest expectations. The Boeing sales team is off to a great start in 2018, as well. By the end of May, the company had received 306 net orders for commercial jets compared to 205 during the same period in 2017.

This article originally appeared in the Motley Fool.

Recently, Boeing has been particularly successful in selling widebodies -- the larger dual-aisle aircraft that typically serve longer international routes. This is a market segment that Boeing had expected to remain weak until around 2020.

Last week, Boeing continued its impressive run of success in the widebody market. This time, it secured orders for 24 widebody freighters from package-delivery giant FedEx (NYSE:FDX).

Turning things around in the widebody market

Boeing currently builds four different widebody aircraft types: the four-engine 747 jumbo jet, the small 767 (mainly used as a freighter today), the large twin-engine 777, and the popular 787 Dreamliner. Across these four aircraft families, Boeing brought in more than 300 net firm orders in both 2013 and 2014, driven by new versions of the 777 and 787.

However, a combination of factors caused sales to slump after 2014. Boeing captured 180 net firm orders for widebodies in 2015 and just 118 in 2016. Sales started to pick up again in 2017, but widebody order activity remained quite low compared to the 2013-2014 boom years, with 167 net firm orders.

Boeing's widebody sales momentum has accelerated in 2018. In the first five months of the year, the company locked down 113 net firm widebody orders, including major deals with the likes of American Airlines, United Parcel Service, and Turkish Airlines. Considering that aircraft orders tend to be weighted toward the second half of the year, this puts Boeing on track for a spectacular performance in 2018.

FedEx orders up even more new planes

On Tuesday, Boeing announced an order for 24 widebody freighters from FedEx consisting of 12 767s and 12 777s. These aircraft will help FedEx replace older, less-efficient aircraft and accommodate future growth.

FedEx already operates both of these aircraft types, with 57 767Fs and 34 777Fs in its fleet as of the end of May. Additionally, prior to placing this new order, FedEx already had another 70 Boeing widebody freighters scheduled for delivery in the coming years.

The additional 767s that FedEx ordered all will be delivered by May 2022. FedEx has become a big fan of the 767 over the past few years, so it's taking advantage of Boeing's decision to increase production of that aircraft type from 2.5 per month to three per month in 2020.

With the exception of two incremental 777s scheduled for delivery in fiscal 2021, all of the 777 freighters ordered last week will be delivered in fiscal 2023 and thereafter. Thus, the FedEx deal will have a limited impact on keeping the 777 line busy until production of the next-generation 777X ramps up. That said, Boeing and FedEx have routinely moved orders around in recent years. The two companies might strike a deal to accelerate some 777 deliveries, if needed.

More widebody orders could come soon

After Boeing adds the FedEx deal to its firm order book, it will have picked up 137 net firm orders in 2018 (assuming no further cancellations). That would already be more than it received in all of 2016.

Furthermore, Boeing is likely to win more widebody orders next month at the Farnborough Airshow, the largest industry trade show of the year. It already has some sizable commitments that could soon be converted into firm orders, including a deal for 40 787-10s with Emirates and a commitment for 10 787-9s from Hawaiian Holdings.

Several other airlines are mulling 787 Dreamliner orders, as well. That includes major customers such as United Continental and British Airways parent International Airlines Group, along with Saudi discount airline flynas.

Considering all of these potential deals -- plus others that may not have been reported -- Boeing could conceivably have around 250 net widebody orders for the year by the end of July. This surge in orders should give investors confidence that Boeing will be able to stick to its current production plans and continue to grow free cash flow over the next five years and beyond.

Adam Levine-Weinberg owns shares of Hawaiian Holdings. The Motley Fool recommends FedEx. The Motley Fool has a disclosure policy.

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