BA

[rffrydr]

Boeing selling off on GOOD news:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aVcW9Enj_UpI&refer=home

Chinese visit may have been best times. Lotsa toppy looks out there.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

How do you value a company that can't make enough?

[rffrydr]

While the blame goes to GM. Better question: where will Exxon and Chevron take us? It wasn't all that long ago:

http://www.bizjournals.com/louisville/stories/2008/02/11/daily1.html
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Today is the Tomorrow you worried about Yesterday!

[Suomodo]

http://www.indexarb.com/indexComponentWtsDJ.html

IMO BA is I guess one of the major drags on DJIA and responsible for so good 60 points of underperformance to SPX

[rffrydr]

How many would've guessed this one in under Jan/March lows?

http://stockcharts.com/h-sc/ui?s=BA&p=D&b=5&g=0&id=p95522646637
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Boeing finally makes some progress on the 787. Test flight due "later this year":

http://www.msnbc.msn.com/id/25283094/

[rffrydr]

We really got the recognition volumne spikes, high and low, in this selloff--which could be seen as an August 2006 retest:

http://stockcharts.com/h-sc/ui?s=BA&p=W&b=5&g=0&id=p55732091216

Still at the highs of the Chinese Premiere visit. Why isn't buck doing more for this stock? Maybe it is--in it's "crude" reflection.
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Today is the Tomorrow you worried about Yesterday!

[texfly101]

Boeing has set a timeline for Y1, the replacement for the venerable and best selling 737, of 2012. That means probably an EIS of 2015 at the soonest.

Title: Boeing sets timeline to replace 737
Wichita Eagle 12/08/2007
Author: Associated Press

SEATTLE - Boeing Co. will decide on a plan to replace its popular 737 aircraft by 2012 at the latest, a company spokeswoman said.

Last year, the company started seriously considering a successor for the 737. Boeing has won more than 6,000 orders for the plane since its 1967 debut.

More than 75 percent of the 737 is made in Wichita at Spirit AeroSystems. About half of the people employed at Spirit work on the 737 program and the plane accounts for about half of the company's revenue.

Sandy Anger, a Boeing spokeswoman, said Boeing estimates it will be ready with a replacement for the 737 "sometime in the middle of the next decade -- give or take a couple of years."
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dj

[texfly101]

Costly Oil, Slumping Dollar Spell Trouble For Airlines, Aerospace Companies
Aviation Week & Space Technology 11/19/2007
Authors: Joseph C. Anselmo and Madhu Unnikrishnan

In many ways, it’s the best of times for the global aerospace, defense and airline industries. Production lines are humming at Boeing, Airbus and business aircraft manufacturers as they book orders at a record pace. U.S. defense spending has defied predictions of a slowdown. Almost every U.S. aerospace company outperformed Wall Street’s profit expectations in the third quarter. And airlines are flying packed aircraft and generating profits.

But economic headwinds are blowing into this idyllic landscape, introducing tough challenges for key segments of the industry. In the U.S., record oil prices are threatening to short-circuit the airline industry’s recovery, which might force carriers to further defer purchases of new aircraft. “If oil really is going to be at $100 a barrel, we’ve got to look at restructuring of the [industry] yet again,” US Airways CEO Douglas Parker told investors this month at a Goldman Sachs conference. “I’m not certain that where we are today as a business we can handle $100 oil.”

In Europe, the pressure is on aerospace manufacturers and suppliers, which sell their products in U.S. dollars but pay their employees in local currencies. In the midst of soaring sales and deliveries, Airbus’s parent company, EADS, recently lowered its profit forecast for 2007 by $580 million—to zero. The dollar’s decline has subtracted nearly $19 billion from the value of EADS’s backlog during the past year.

The impact is even more painful in the export-dependent Canadian aerospace industry, where an unexpectedly rapid appreciation had the Canadian dollar trading as high as $1.10 this month, up from less than 90 cents earlier this year and 62 cents in 2002. “We were pushing productivity improvements to position our industry to be able to face parity” with the U.S. dollar, says CMC Electronics CEO Jean-Pierre Mortreux, chairman of the Aerospace Industries Assn. of Canada. “But no productivity plan or process improvement could compensate for a 25% valuation rise in just six months.”

Looming in the background is a shaky U.S. economy, which could reduce demand for everything from business aircraft to airline travel and make it harder for carriers to raise fares to offset rising fuel costs. U.S. Federal Reserve Chairman Ben Bernanke is predicting economic growth will slow in the fourth quarter and into 2008, though he downplays fears of an outright recession.

And then there’s defense spending. Though immune from economic downturns, conventional wisdom holds that the U.S. military will at best keep pace with inflation after President Bush leaves office in 14 months. “The base budget is likely to flatten out and wartime spending presumably will start coming down,” says Steven Kosiak, vice president for budgetary studies at the nonpartisan Center for Strategic and Budgetary Assessments in Washington.

Put that all together, and it’s not difficult to see why angst is rising in corporate suites on both sides of the Atlantic, despite sturdy airline profits and robust demand in commercial aerospace and defense. But the “pain points” vary widely by region, industry segment and company size. Among the key challenges:

•Soaring oil prices. U.S. airlines have been able to offset rising oil prices through a combination of cost cutting and capacity restraint, which has led to fuller aircraft and enabled carriers to raise fares. In the third quarter, Delta Air Lines posted record revenues and Northwest Airlines had its best results in a decade. “We as an industry have been pretty darn successful at passing on higher crude prices,” United Airlines CFO Jake Brace told investors this month.

But with crude prices nearing $100 a barrel, airlines are scrambling again. Brace says that if oil prices remain high and demand slows, United could be forced to ground up to 100 or more of its aircraft. “The third quarter may well turn out to have been a high point,” says Standard & Poor’s airline credit analyst Phillip Baggaley. (S&P, like Aviation Week & Space Technology, is a unit of The McGraw-Hill Companies.)

Southwest Airlines and Alaska Airlines are the only two U.S. carriers that hold long-term fuel hedges to protect against price spikes. “Most carriers have limited or no hedge positions beyond the first quarter of next year,” notes Calyon Securities analyst Ray Neidl.

In Europe, airlines generally are better positioned to cope with $100 crude. The soaring value of the euro has helped offset some of the bite of rising oil prices, and many European carriers have robust fuel hedges in place. And European carriers derive a larger portion of their revenues from international routes, where there is less or no competition from low-cost carriers.

Even though oil prices moderated last week, analysts predict they will remain high over the long term. Julius Walker, an analyst at the Paris-based International Energy Agency (IEA), says supplies remain tight, with OPEC’s spare capacity limited to just two million barrels a day. That means the oil cartel has little leverage to limit a future price spike caused by a geopolitical or weather crisis.

Meanwhile, thirst for oil continues to rise in China and India. Eduardo Lopez, IEA’s senior demand analyst, says consumers in those nations have little incentive to limit fuel consumption because heavy government subsidies shield them from price spikes. He believes that if governments in China, India, the Middle East and Southeast Asia were to lower energy subsidies, global demand for oil could fall sharply, leading to an easing of prices.

A similar situation exists in Europe, where high energy taxes—not government subsidies—keep consumer behavior in check. Lopez says European consumers and businesses already pay high prices for fuel and are less likely to moderate their travel and purchasing behavior due to rising oil prices. While that’s good for European airlines, it keeps pressure on energy demand.

•A shaky economy. A big concern is that high oil prices will push the U.S. economy into a recession. That would reduce demand for air travel, making it much more difficult to raise fares to offset higher fuel costs. U.S. demand for transport fuels already is slowing, says Lopez. That may just be a reaction to rising oil prices—or it could be related to the unfolding economic consequences of the subprime mortgage crisis.

John Heimlich, chief economist at the Air Transport Assn., says airlines are especially concerned that a weakening economy and higher energy costs will prompt corporations to slash travel budgets. If that happens, demand for lucrative business fares would drop.

“The combination of a slowing economy and the high oil prices is the danger for the airlines,” says S&P’s Baggaley. “Either one of them they’d be able to deal with, but the combination is likely to cause considerable pain.”

Such a scenario might impact demand for aircraft from Boeing and Airbus, which have seen orders soar during the last three years, largely on the strength of sales outside the U.S. The two aircraft manufacturers are aggressively ramping up to meet demand, but production could be peaking just as the next downcycle looms. If high oil prices make that downcycle worse, they could see some orders deferred or canceled.

Boeing and Airbus have long argued that high fuel prices will spur U.S. airlines to replace their older gas guzzlers with new fuel-efficient models. But while North American carriers have parked a lot of their older aircraft, such orders have yet to materialize. If legacy carriers start losing money again, it’s unclear how they would be able to finance such purchases.

Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes, says while oil prices will likely remain high and volatile, the impact on aircraft makers and the economy is hard to gauge. “We continue to see strong fundamentals,” he says.

•A weak dollar. The decline of the dollar to as low as $1.47 per euro is forcing EADS to look for additional savings under its Power8 cost-cutting effort (AW&ST Nov. 12, p. 52). CEO Louis Gallois declines to say if that will mean more layoffs beyond the 10,000 job reductions already announced. But he recently described the currency situation as “unbearable.” The low dollar also is complicating EADS’s efforts to sell off some of Airbus’s industrial operations in France, Germany and the U.K. Like Airbus, any buyers would have a euro cost basis and a dollar revenue stream.

But larger companies like EADS at least have the financial wherewithal to hedge currency, which limits their exposure in the near term. EADS is hedged at $1.15 per euro in 2008 and $1.24 in 2009. That buys the company two years of breathing room to continue to drive down costs. Smaller suppliers that don’t have the financial savvy to hedge are much more exposed to sharp currency swings.

The same holds true in Canada, where Bombardier and CAE have so far weathered the sharp rise in the Canadian dollar. CAE, which exports most of the aircraft simulators it sells, just reported a 25% increase in net earnings and a 26% gain in revenue. But Mortreux, the aerospace association chairman, says currency hedges provide only temporarily relief. “If the exchange rate stays the same, it will have a major impact on manufacturing in Canada in six months to two years,” he predicts. “The risk is we will lose new contracts because we are too expensive, or we have to reduce R&D, or we relocate our workforce to stay competitive. In the paper industry they’ve already started to lay off people and stop production.”

Conversely, the slumping greenback benefits Boeing and other U.S. aerospace exporters by making their products cheaper abroad. It’s also a benefit to U.S. airlines, which are deriving more of their business from international routes and can repatriate fares charged in foreign currencies.

But there’s a double-edged sword: The low dollar is forcing European companies such as Airbus to become leaner. “It gives them an incentive to get that much more efficient,” says Pierre Chao, a senior fellow at the Center for Strategic and International Studies in Washington. “Then, when the dollar reverts, as it has a tendency to do, you suddenly end up with a very competitive European industry.”

•Moderating defense spending. U.S. military spending is in its 10th consecutive year of above-inflation growth and has defied predictions of a slowdown for several years. Adjusting for inflation, the Pentagon’s budget has risen 31% since 2000—and 58% if the cost of supplemental war funding is included.

But current spending plans call for the core defense budget to decline in real terms after 2009, though the next president will help decide if that really happens. “Take out the war funding and there are a number of indications that suggest defense spending is flattening out,” says budget analyst Kosiak. “Historically this is about as long a buildup as we’ve had.”

But while defense spending can’t keep rising at a rapid clip, nobody expects a decline comparable to the 1990s “peace dividend” that followed the collapse of the Soviet Union and the end of the Cold War. And supplemental budgets for war funding in Iraq and Afghanistan continue to serve as a relief value to fund other defense priorities.

“The angst level is rising steadily, yet the near-term outlook continues to be robust,” says Chao. He admits he’s been surprised by the resiliency of military spending. “Good things last longer than most people expect.”
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dj

[texfly101]

A link to aviation analyst, Scott Leeham's website that has interesting and informative articles on Boeing. It can be slow loading on the pdf files. There is a Reports/Studies section that has a report about Canada entering into the Boeing world trade suit against Airbus subsidies.
http://leeham.net/
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dj

[texfly101]

Boeing announced a buyback 10-30

"Boeing's board of directors on Monday approved the repurchase of up to $7 billion of company stock and declared a regular quarterly dividend of 35 cents a share. The new repurchase follows the nearly $8 billion worth of stock Boeing has repurchased since 2004. "Our strong financial performance allows us to return value to our shareholders while continuing to invest in our growth and becoming more productive," said Boeing Chairman, President and CEO Jim McNerney. "We are executing a balanced cash deployment strategy that's serving Boeing and its shareholders well." The dividend is payable Dec. 7 to shareholders of record as of Nov. 9. Repurchases enhance shareholder value by reducing the number of shares on the market. Over time, that could contribute to a higher stock price."
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dj

[texfly101]

I was looking at BA currently at +95-, what the future might bring? There is a lot of unknowns on the horizon with the Tanker Contract, whether the 787 will deliver on the revised schedule, and the effect that the A350 will have on 777 sales.
I feel that the tanker is a done deal. There is no way that the pols in an election year will give the contract to a proposal that is seen as French based. This is tempered by the uncertainty of the 787 flight test schedule, production schedule and vulnerablity to supply chain snafus.
The A350 will certainly take away the -200 end of the 777 market, but then again, its been the -300 that has been selling. I do notice a slowdown in -300 sales, maybe airlines waiting to see if Boeing counters with a 777 Lite? Boeing has their hands full right now to try to configure the 787-10 that will be the low end A-350 competitor, all their engineering force being tied up in the 787-3, -8,-9 variants and the 747-8i. So airlines are left with the A350 and a TBD 787-10. Hmmm, that is not an easy choice for them.
I have felt that 95 was a fair price for BA. I don't like anything above that and am currently out of the market for them, tho at 85 I'm in. I'm on the fence about which way they will go this next year. Maybe 75 if the cards drop against them with the tanker and another delay to the 787. I could see a 20% drop with back to back bad news as Commercial has always led the sentiment. Their margin will decrease next year due to 787 expenditures, this should have been factored in by now as its known to all analysts. 75 or 95 next June?
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dj

[HenryTo]

Wall Street gets surprised - BA quickly falls 3% due to this delay.
--------------------------------------------------------------------------------
Boeing Delays First 787s by Six Months
Wednesday October 10, 12:05 pm ET
By Dave Carpenter, AP Business Writer
Boeing to Delay First 787 Deliveries by 6 Months Due to Assembly Problems

CHICAGO (AP) -- Boeing Co. is delaying initial deliveries of the 787 Dreamliner by six months due to continued challenges in completing assembly of the first airplanes, the company said Wednesday.
Boeing said deliveries that had been scheduled to begin next May will be pushed back to late November or December 2008.

The first flight, already pushed back once from the initial target of earlier this fall, now is anticipated around the end of the first quarter of 2008.

Boeing said the postponement will not materially affect its earnings or guidance for next year.

"We are disappointed over the schedule changes that we are announcing today," said Chairman and CEO Jim McNerney. "Notwithstanding the challenges that we are experiencing in bringing forward this game-changing product, we remain confident in the design of the 787, and in the fundamental innovation and technologies that underpin it."

McNerney had publicly voiced confidence as recently as four weeks ago that the airplane maker would be able to deliver the first 787 on time next May to Japan's All Nippon Airways Co., despite skepticism among industry observers following the first postponement.

On Sept. 5, Boeing formally pushed back the first test flight to mid-November or mid-December due to complications with final assembly and finalizing flight-control software. That would have left the company just five to six months before the first delivery, or about half the time it took to test the 777 a decade ago.

The company first acknowledged problems meeting the original test-flight schedule in August when it cited ongoing challenges with out-of-sequence production work, including parts shortages, and remaining software and systems integration activities.

Boeing shares, which had moved higher Wednesday before the late-morning announcement, fell $2.05, or 2 percent, to $99.40 in midday trading after briefly falling as low as $97.54.

[HenryTo]

Airbus does an about-face on the A350. Following courtesy of the WSJ:
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Airbus, in Turnabout, Bets On
Composite Frame for A350
By DANIEL MICHAELS
September 15, 2007

In a switch that could make Airbus's next jetliner more competitive with rival Boeing Co.'s new 787 Dreamliner, the European plane maker plans to build the frame of its planned A350 model from advanced composite materials instead of metal.

The lighter structure -- similar to that of the Boeing plane -- reduces fuel consumption, increases a plane's range and reduces wear on key parts such as landing gear. The shift also cuts the need for costly maintenance inspections.

For months, Airbus had been telling customers that attaching skin panels made of carbon-fiber composites to an aluminum-alloy skeleton was superior to Boeing's method of making both the frame and fuselage of the Dreamliner from composites.

But Airbus, a unit of Franco-German European Aeronautic Defence & Space Co., began to rethink its position after encountering resistance from customers who questioned whether the A350 would be more difficult to maintain than the Dreamliner.

"We thought the design we had was very good, but this one is even better," said John Leahy, Airbus chief operating officer for customers. Airbus officials say the switch will offer crucial weight savings.

An Airbus spokesman played down the change as "just part of the normal refinement" that occurs when an aircraft is being developed. Airbus told potential customers of the plans during a recent update on the A350 program.

Airbus intends to complete its designs of the A350 late next year. It expects to deliver the first A350 in 2013.

Although Boeing recently said it expects as much as a four-month delay in the planned first flight of the Dreamliner, the Chicago-based aerospace company still is hoping to deliver the first Dreamliner on schedule in May.

Airbus has faced public pressure from several key customers throughout the design of the A350. After encountering criticism for first proposing the plane in 2004 with a more traditional all-aluminum fuselage, Airbus said in July 2006 that it was renaming the airplane the A350 XWB, for extra-wide body. Those plans called for making the skeleton of aluminum and the skins of composites, even though some aerospace engineers warned that such a combination could set the stage for corrosion and would require extra attention.

John Plueger, president and chief operating officer of leasing titan International Lease Finance Corp., which had criticized Airbus's plans to use the aluminum frame, said he believes Airbus is making the right decision.

"This is what we were hoping for," Mr. Plueger said. "We're getting more and more interest in the plane from our leasing customers, so the sooner Airbus can get it to market, the better."

[HenryTo]

I stand corrected - test flight of Boeing 787 is now delayed until November. Delivery date of May 2008 to Nippon Airways, however, is still on track, for now.
---------------------------------------------------------------------------------
Boeing delays 787 test flight
Wednesday September 5, 1:06 pm ET

By Bill Rigby

NEW YORK (Reuters) - Boeing Co (NYSE:BA - News) on Wednesday pushed back the first test flight of its new 787 Dreamliner to a range of mid-November to mid-December, about three months later than originally planned, putting pressure on its tight schedule to deliver the first plane in May next year.

The delay, caused by problems programming the flight control software and a shortage of bolts, truncates Boeing's already shortened test flight schedule. But the plane maker is holding to its delivery target and said the delay does not affect financial forecasts.

The announcement of the new target date, which had been expected after media reports over the weekend, sent Boeing shares lower initially, but they later recovered to make gains in afternoon trading.

The plane maker is struggling with unfinished work on components already shipped to its Everett, Washington, plant, and is taking longer than expected to get the Honeywell International Inc (NYSE:HON - News) flight software operating, said Scott Carson, chief executive of Boeing's commercial plane unit, on a conference call on Wednesday.

A shortage of permanent bolts made by Alcoa Inc (NYSE:AA - News) -- known as fasteners -- is contributing to the delay, said Mike Bair, the head of the 787 program.

Boeing said it still intends to deliver the first 787 on schedule next May, to Japan's All Nippon Airways (Tokyo:9202.T - News). Carson said that even if first deliveries were pushed back by one to three months, the financial effect would be "minimal."

He declined to discuss the details of contracts with customers, but it is standard in the industry for a plane maker to pay penalties to customers when planes are delayed or don't meet performance guarantees.

WALL ST WORRIES

The company unveiled the shell of the new, carbon-composite plane in early July amid a fanfare of publicity but has been working around the clock since then to remove and replace a number of temporary fasteners and to install the plane's electronics.

A delay to the first test flight does not necessarily mean delays to actual production and delivery of the plane, but Bair said it does erode the time Boeing has to "deal with anything big" that arises from the test flight program.

Airlines and Wall Street analysts are watching Boeing closely for delays after European rival Airbus suffered embarrassing and costly delays on its new A380 superjumbo.

If the 787 flew in mid-November, it would leave only about six months for Boeing to complete the flight test and certification program. The company took 11 months to conduct flight tests on the 777, its last new commercial jetliner.

"The firm now faces a significant challenge meeting first delivery in May 2008 and we believe that there can be virtually no buffer room left in the test schedule from here," said Bank of America analyst Robert Stallard in a research note.

Boeing has never pinned down an exact date for the first test flight, saying the plane would fly when it was ready, but it did originally set August as a broad target, later moving that to late September.

The plane maker has 706 firm orders for the plane from 48 airlines and leasing companies, making it the company's most successful plane launch to date, with a backlog worth more than $100 billion.

Boeing shares were up 59 cents at $96.52 on the New York Stock Exchange.

[HenryTo]

Boeing having a few outsourcing problems of its own, as it is forced to increase R&D spending for next year. Overall, however, we're only looking at a few weeks of delays, at the most:

http://www.ft.com/cms/s/7f93ef44-3ac3-11dc-8f9e-0000779fd2ac,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html