Airbus believes that new orders for its planes will drop by half to about 700 in 2008. The company's backlog of planes that it has to build and deliver sits at 3,600, according to The New York Times.
The introduction of new products helped Airbus and Boeing (NYSE: BA) to a year of record orders in 2007, but that has taken up most of the demand for commercial aircraft that will be delivered over the next few years.
The slowdown in orders is not likely to harm earnings at either company soon because heavy delivery schedules will keep revenue flowing. It does raise the question of whether the industry will hit a slump near the end of the decade when current orders have been filled.
If the market senses that the aircraft business will not be as robust over time as it is now, it will probably pressure Boeing's shares, which have already fallen from a 52-week high of almost $108 to just above $85.
Investors who plan to hold Boeing long-term may want to reconsider.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
2-20-2008 @ 11:46AM
Ron said...
The continued expansion of the industry just might be found in the good old USA. Our major carriers (there numbers are shrinking, for sure) are flying very old planes and will need to replace them sooner, rather than later. The possible merger of Delta & Northwest would bring about the largest air carrier in the world. There is definitely room for growth here in the remaining years of this decade.
Also, how can we dismiss Boeing's role as our #2 defense company, sitting just behind Lockheed? The US Air Force tanker deal, which seems to be favoring Boeing, would add billions to their growing coffers. Another significant profit maker for Boeing are their military jets which are sought after and sold throughout the world.
When an analysis of company's prospects leaves out a very significant part of their business, I begin to question any suggestion that investors might might want to reconsider remaining long on Boeing.