Aerospace Diary

Posted by- Neelam Mathews Jan 6, 2012 The final 2011 delivery totals for the 787 and the 747-8 are disappointing, but not unexpected. It is clear that the final re-work on the 787s is taking longer than expected, says Wedbush. Boeing was able to delivery a total of just three 787s and nine 747-8s, for a total of 12 as compared to the October guidance of 15-20 (~6 787s and 12 747-8s). “We continue to believe the 787 deliveries will be un-even through most of 2012, but the focus for investors is the 787 production ramp. We continue to believe that the step up to 3.5/month in April should not be an issue, but the step up to 5 expected in 4Q 12 is the primary challenge for Boeing and its supply chain. “For 787 deliveries, the company attributes the delays to both customer issues and one-time items, and does not believe there are any systemic issues. If this is true, we would expect to see a gradual increase in 787 delivers in 2012, where we currently model approximately 55 787 del...

Neelam Mathews Dec 23, 2011 The watchword is caution . For the most part, the industry fundamentals are holding up well, but there is a  much greater sense of caution heading into 2012 on the part of airlines and the parts and service providers ,  says Wedbush .” We believe investor sentiment may have become too cautious on the aftermarket heading  into 2012, while the assumption that Boeing and Airbus will be able to execute on the anticipated production  increases without any issues is likely challenged at some point in 2012. For the commercial aftermarket, the primary positives heading into 2012 are strong backlogs for deferred  engine and heavy maintenance, continued growth in the emerging markets, and current expectations that the  number of   parked aircraft will not significantly increase in 1H 2012.   Heavy and engine maintenance backlogs  remain strong, with many firms selling late-2012 and 2013 slots.   However, the confidence...

Posted by- Neelam Mathews Dec 1, 2011 Boeing and the IAM 751 (Machinists) reached an agreement on a 4-year contract extension that will be in effect until September 2016. Basically, in exchange for an agreement to keep 737 production in Renton, covering both the 737NG and the 737MAX, Boeing has been able to reach an agreement with the Union 9 months before the current contract is up for renewal, and get the Union to agree to push the National Labor Relations Board (NLRB) to dismiss the case involving the new 787 assembly line in Charleston, South Carolina. The current agreement is not scheduled to expire until September 2012. Risks to the sector include: economic growth, commodity prices, interest rate risk, credit markets, defense/security spending, commercial air travel, carrier financial health, defense policy and shifting spending priorities, freight traffic and demand, general industrial growth, supplier relationships and technological advancements and business confidence....

Posted by- Neelam Mathews Sept 30, 2011 Hexcel -leading global supplier of advanced materials - Carbon Fiber, Epoxy resins and adhesives, glass, aramid and carbon fabrics, prepregs, aircraft flooring addressed the impact the new re-engined narrow body aircraft will have, indicating that ship set values could go up by as much as 50%. “This had been one of the key questions investors have focused on recently, and a major reason, in our view, for the stock being up 5.25% on a day when the S&P 500 only saw a 0.81% move,” says Kenneth Herbert of  Wedbush. He adds that however, it is important to note that these estimates are preliminary, “and we believe the 50% represents to the upper end of the possible increase.” The company indicated that it will take another 1-2 years before it knows for sure what the precise impact will be, but management feels confident with what they know now to at least put a preliminary estimate out. The upside will be basically the same whether it i...

Posted by- Neelam Mathews Sept 2, 2011 The commercial transport market put up solid traffic growth in July of 5.9% and capacity growth of 5.4%, driving load factors for the month back up to 83.1%, "a level we have not seen yet during this recovery," says Wedbush Securities of the IATA report. "Although the markets did not start their extreme bouts of volatility until the tail end of July (and we would expect a lag between any economic headwinds and commercial travel anyway), we were impressed by the results for two reasons: 1.) the results reaffirmed what we have been hearing from those companies in our universe: that they haven’t seen any slowdown in their aftermarket businesses, and 2.) traffic demand grew in excess of commercial capacity which was the first time this has occurred since November  2010.    "We  remain  encouraged  that  this  pattern  of  capacity  discipline  by  the  airlines  and...

Posted by: Neelam Mathews July 21, 2011 Boeing bowed to market pressure and has announced it will re-engine its 737 as part  of the American Airlines order, instead of launching a new clear sheet aircraft, says Wedbush Securities.  “While surprised by  the  timing  of  this  announcement, and with longer  term            concerns about  the narrowbody  strategy, we  believe  it  is  the  best  decision Boeing could make considering the current market dynamics,” add the analysts. Boeing confirmed that American Airlines has selected Boeing to provide 200 narrowbodies, with options for 100 more, to accelerate its single-aisle fleet replacement. The agreement includes 100 Next-Generation 737s, with options for an additional 40 airplanes. In addition, American Airlines has committed to order a variant of the 737 featuring new more fuel-...