Boeing Taps Rockwell Collins for 777X Touchscreen Displays

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Rockwell Collins Inc. (NYSE: COL) announced on Wednesday that it will provide touchscreen flight displays for all five flight deck displays on the new 777X from Boeing Co. (NYSE: BA). The 777X is the first commercial jet to be equipped with touchscreen forward flight displays.

The technology has been certified for commercial aviation on business aircraft, and will need to be certified for use on the 777X as well. Given that other applications of the technology are already certified and in use, the possibility that the touchscreen displays will have a negative on Boeing’s timetable for the new plane is reasonably low.

Boeing’s first 777-9X is not scheduled to begin production until next year, and first customer deliveries are not expected until 2020. One could argue that the current model of the plane, the so-called 777 Classic, is just as important to the company as either the 737 or the 787.

But Boeing is having trouble selling the 777 Classic and plans to reduce production from 8.3 per month to 7.0 per month early next year, with an eye to reducing the rate to 5.5 per month in 2018. In July the president of Boeing’s commercial division said that orders for the 777 Classic are “pretty solid” through the third quarter of 2017. According to Aviation Week, 777 production is about 55% sold for 2018 and 30% sold for 2019.

Boeing has taken orders for just eight 777Xs so far in 2016 and none for the 777 Classic. The 777 backlog is 476, including both the Classic and the 777X. At a production rate of seven per month, the 777 Classic backlog of 170 will last two years, but that leaves Boeing with no backlog until the 777X is in production. The company has admitted it needs 40 to 50 new orders per year for the 777 in order to bridge the production gap between the new and old versions of the plane.

Rockwell’s stock bounced up about 1.8% on Wednesday, to $83.47 in a 52-week range of $76.03 to $95.11. The consensus 12-month price target is $93.57.

Boeing’s stock rose nearly 2.2% on an announcement that the federal government had cleared the way for the company to sell and lease planes to Iran. Competitor Airbus also received clearance to deliver 17 planes to Iran. Boeing shares closed at $130.56, in a 52-week range of $102.10 to $150.59, and the consensus price target is $149.27.

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