Aircraft Finance & Leasing News - North America

AirGuide Business, July 21, 2008

7/21/2008

Defense contractors, despite the more than $40 billion in fighter purchases up for grabs soon, governments are concerned about the long-term health of the industrial base for combat aircraft. Contractors have started to engage in a spate of hotly contested fighter competitions around the world, with decisions pending in the next 24 months. But in the U.S., the three major military airframers - Lockeed Martin, Boeing and Northrop Grumman - are participating in a far-reaching "war game," a Pentagon-backed study intended to assess the status of the future industrial base and secure capabilities required for future fighters and bombers. One question is whether a second source is needed for the Lockheed Martin F-35 Joint Strike Fighter. Boeing has briefed the Pentagon about how it could build the F-35, but JSF program officials say the cost is prohibitive and runs counter to the original affordability strategy underpinning the program. 7/18/2008

The Government Accountability Office (GAO), the watchdog arm of Congress, on July 16 upheld Boeing's protest over an aerial refueling tanker contract awarded to Northrop Grumman, and recommended the U.S. Air Force review the deal. The decision could wrest the $35 billion contract from Northrop Grumman and its European partner Airbus parent EADS. 7/16/2008

Airbus, EADS

Despite the Pentagon decision last week to re-do the big Air Force refueling tanker competition awarded in February to Airbus parent EADS and its partner Northrop Grumman, top EADS executives remain determined to break into the U.S. defense market. They talked about making a billion-dollar U.S. acquisition next year. And they are eyeing more than tankers. Saturday, the EADS leadership shrugged off the tanker re-bid, expressing confidence that the original award would be sustained. And executives spoke optimistically of winning another big U.S. military airplane contract: aiming to eventually replace more than 450 U.S. Army mid-size transport planes. Boeing doesn't even have a candidate plane for that role. Reported by The Seattle Times. 7/14/2008

Boeing

Boeing commercial plane chief Scott Carson said earlier this year that the company was not likely to hit 1,000 net orders for the fourth year running. Boeing will have more than 600 orders for the year so far when it adds deals announced at Farnborough to its order book. Last year it took an industry-record 1,413 net orders, easing ahead of rival Airbus, even though the company had made downbeat comments about order growth. 7/18/2008

Boeing

Boeing has a much lower exposure to the US market, which it hopes will lessen the blow if airlines' woes continue. Only 10.5 percent of Boeing's order book is destined for US airlines, compared with about 60 percent during the last downturn after September 11. Airbus says 11 percent of its current order book is from US customers. Even so, Boeing is worried by the sharp rise in oil prices, chiefly for its potential effect on the world's economies. Boeing makes no official forecast for oil prices, but said its hired consultants are forecasting USD$70 to USD$80 a barrel for the longer term, as supply and demand eventually balance out. Crude oil futures traded around USD$136 per barrel on Thursday. 7/18/2008

Boeing

Boeing is confident it will not face mass cancellations of jet orders from the world's airlines, even as they come under massive strain from soaring oil prices, hard on the heels of the biggest buying spree in the industry's history. After a three-year boom in sales, the US plane maker has 3,661 aircraft in its order book, worth more than USD$270 billion at list prices, to be delivered over the next six years or so. Rival Airbus has 3,663 planes to deliver. Some industry insiders and analysts predict that as much as 30 percent of that backlog will end up being cancelled as emerging and cash-strapped airlines get cold feet when it comes to handing over the bulk of the money for their planes. But Boeing is holding fast to its view that the fallout will not be nearly as bad as some predict. 7/18/2008

Boeing

Boeing announced firm orders for 197 planes worth $23.6 billion this week, bringing its tally this year to 672 planes. Boeing Commercial Airplanes Chief Executive Scott Carson has predicted fewer than 1,000 orders in 2008 after 1,413 in 2007. 7/17/2008

Boeing

Boeing boosted its at the Farnborough Airshow tally to 197 planes worth $23.1 billion with an apparent headline grabbing deal with Air China for 45 of its planes worth $6.3 billion. But the Air China deal, along with two others from Etihad Airways and Malaysia Airways, were already on Boeing's books -- attributed to unidentified buyers. Removing those from the tally, the Chicago-based plane maker's deals at the world's biggest air show drop to just $5.6 billion. 7/17/2008

Boeing

Boeing Machinists who assemble the company's jetliners filled the former home of the Seattle Sonics on Wednesday to authorize their union to strike if a new labor contract can't be reached. They are demanding a much bigger share of The Boeing Co.'s success of the past three years -- and they are prepared to walk in September and shut down Boeing's jetliner production if they don't get it. 7/17/2008