Company Watch - Boeing

AirGuide Business, July 14, 2008

Boeing said yesterday that its second-quarter financial results will include a charge of approximately $0.22 per share, or $250 million, owing to delays in its Airborne Early Warning & Control program. The manufacturer continues to expect earnings per share of $5.70-$5.85 for full-year 2008 "as companywide performance and productivity are expected to offset the AEW&C charge by year end." Its EPS guidance for 2009 remains unchanged at $6.80-$7.00. 7/10/2008

Boeing has seen a string of order deferrals in the United States this year as the airline industry battles challenges such as high fuel costs, a senior executive said on Wednesday. Randy Tinseth, Boeing Commercial Airplanes Vice President for Marketing, said the delays also featured one total cancellation, but the issue was limited to the US market -- which accounts for 10-11 percent of its sales. Airline fuel costs have soared this year alongside record oil prices above USD$140 a barrel, forcing several airlines to cut capacity and increase fuel charges to protect margins. But Tinseth said Boeing did not expect the tough climate to last -- predicting the value of the new plane market to grow in the long term. He said the group now valued the market for new commercial planes at USD$3.2 trillion by 2027. That is up from a USD$2.8 trillion 20 year forecast provided last year. The company said it expected a smaller fleet size of 35,800 planes in 2027 than it did in its equivalent forecast a year ago, but this was because more companies were replacing older planes than ordering additional new ones. The percentage of replacement planes grew to 43 percent from 36 percent last year as airlines looked for vehicles with more efficient fuel usage. 7/9/2008

The steep rise in fuel prices confronting the commercial aviation industry will drive demand for new aircraft, according to Boeing, which said yesterday that it forecasts a $3.2 trillion market over the next two decades. It predicted a need for 29,400 new passenger and freighter aircraft by 2027, up 2.8% from the 28,600 two-decade forecast released last year. It said regional demand would be "balanced." The global fleet will decrease, however, as more aircraft are used as replacements. It forecast that 43% of new planes will replace older aircraft, up from the 36% predicted last year. The fleet in 2027 will number approximately 35,800 units, down from the 36,400 foreseen in 2007. The 3.2% annual increase is identical to the estimated economic growth rate, Boeing said, adding that more than 30% of the forecast market demand already is in backlog. Demand breakdown is as follows: Over the next 20 years, airlines will take delivery of 970 747/A380/jumbo aircraft worth $290 billion, 6,750 twin-aisle aircraft worth $1.47 trillion, 19,160 single-aisle aircraft worth $1.36 trillion and 2,510 regional jets worth $80 billion. 7/9/2008

US FAA issued new airworthiness directives this week requiring "repetitive inspections for cracking" of overwing frames on McDonnell Douglas MD-80s and of the upper frame to side frame splice on the fuselage of Boeing 737 Classics. American Airlines is the largest operator of the MD-80 and Southwest Airlines is the largest operator of the 737 Classic series, but one or both of the types are present in the fleets of most other US major airlines. It does not appear that the ADs, to take effect next month, will require widespread groundings like those that occurred earlier this year. 7/9/2008