Bright and early this morning, Barclays Capital decided to take its downgrade stick to Boeing (NYSE: BA). The aerospace firm was cut to Equal Weight from Overweight and its price target was slashed to $46 from $60. The analyst said the delays for the 787 project are largely the reason for the downgrade, noting that Boeing has yet to determine the schedule for the airplane or the financial impact of the delays.

This latest downgrade is yet another hit for the Dow component, as it struggles to deal with the 787 project - which has caused a lot of problems for the company.

Most companies saw sales weakness in January, and The Boeing Company (NYSE: BA) was no exception. As the global economic slowdown continues to drag out, the company saw sharp drops in order for both freight and passenger jets in the month.

The figures are pretty staggering. In January, the company only received order for 18 jetliners. When you compare this with January of last year, when the company had orders for 65 of its planes, you see a year over year decline of 72%.

Boeing (NYSE:BA) delayed the launch of its 787 Dreamliner four times. That certainly allowed some customers to ask for penalties and it even may have allowed some airlines to cancel orders without financial consequences. Boeing has already reported a bad quarter due to weak sales and a worker strike. The recession in air travel and Boeing's tardiness in getting its new aircraft out the door may be about to exact a very large pound of flesh from the U.S. firm.

According to The Wall Street Journal, "A Dubai-based aircraft-leasing company called LCAL -- set up specifically to handle the Boeing 787 Dreamliner -- has decided to cancel 16 of the 21 jetliners it had on order."

Boeing (NYSE:BA) made a major tactical mistake by letting its machinists go on strike for weeks. It ended up giving the workers a good contract and, in the meantime, it shut down the company when its back orders for aircraft were at record levels. Of course, that upset a large number of the firm's customers who are waiting for the new fuel-efficient Dreamliner, which will be the new flagship of Boeing's fleet.

Management at Boeing does not seem to have learned a single thing from the last work stoppage and is risking another one that could further undermine its stock price and earnings.

According to The Wall Street Journal, "In an effort to ratchet up pressure on Boeing Co. negotiators, leaders of the union that represents about 21,000 of the company's white-collar engineers and technical workers said they will ask their members to authorize a strike in the event that the two sides are unable to agree on a new labor contract." Current contracts expire on December 1, so there is not much time.

Investors would think that, with such huge revenue coming in from the delivery of new planes over the next several years, that the company would do as much as possible to keep its earnings and credibility up with its largest customers intact. Management would rather get a few extra bucks in labor expense savings.

Maybe that is why Boeing's shares, at $43, are less than 50% of its 52-week high.

Douglas A. McIntyre is an editor at 24/7 Wall St.

With its stock down 53% since it announced the first delay in the 787 Dreamliner, it would be an understatement to say that Boeing (NYSE: BA) is going through a rough patch. It has been a month since its 27,000 machinists went on strike and both sides are hurting. Now they are resuming negotiations.

How much pain is this strike creating? Boeing could lose $1.75 billion worth of revenue and take a 13% earnings hit if the strike ends up lasting seven weeks. Meanwhile, machinists -- who average $26 an hour -- are making $3.75 an hour worth of strike pay (assuming a 40 hour week for their $150 a week strike pay packet).

The dispute between Boeing and its machinists appears to be about several issues. But the most important one seems to be that Boeing wants to have the flexibility to outsource work and machinists want to limit that flexibility. I think they should agree to a compromise which would give the machinists a chance to make a proposal to keep work with them if they can do the work well at a competitive price.

The Wall Street Journal reports that Boeing Inc. (NYSE: BA) factory workers who belong to the International Association of Machinists and Aerospace Workers (IAM) have voted to strike by a wide margin. However, thanks to the intervention of a federal mediator, the two sides have 48 hours to try to work something out. I cannot tell whether they will be able to find common ground.

Eighty-seven percent of IAM's "26,800 machinists rejected a proposed three-year contract that would have given members raises and bonuses totaling $34,000," according to the Journal. Boeing offered each union member a $2,500 signing bonus only if "the contract was ratified on the first vote." IAM's decision not to ratify costs workers that bonus. Boeing proposed an "11% pay raise over the life of the contract, as well as boosting pensions by 14% to $80 a month for each year of service. [The contract would pay the average union member] roughly $65,000 a year before overtime that averages $10,000 a year or more," according to the Journal.

IAM wants a bigger raise, more pension contributions, and lower health care payments. As the Journal wrote, IAM wants "pay raises of at least 13% and a larger pension amount. It also wants Boeing to abandon plans to have workers take on a greater share of certain health-care costs."

Boeing Co. (NYSE: BA), whose shares have been battered by concerns about delays in the 787 Dreamliner, today reported better-than-expected earnings.

Profit rose to $1.21 billion, or $1.61 a share, from $873 million, or $1.12, a year earlier, the company said in its earnings release (pdf). Sales gained 4.1% to $16 billion. Analysts had expected earnings of $1.35 on revenue of $16.52 billion, according to Thomson Financial.

"We're off to a good start in what we expect to be another strong year of financial performance for Boeing," said Chairman, President and Chief Executive Officer Jim McNerney in the release. "We are methodically working through our challenges, including the start-up of the 787, and our people remain focused on satisfying our customers and leveraging growth and productivity into better bottom-line and top-line performance for our
company."

Backlog at the quarter was $346 billion, up 32% year-over-year, driven by orders for commercial airplanes at the V-22. Investors responded positively to the news, sending the shares up in premarket trading. The company also reaffirmed its guidance of $5.70 to $5.85 this year and gave guidance of $6.80 to $7 per share for 2009. Analysts expected profit of $5.93 this year and $6.87 for next year.

This goes to show you that yesterday's dogs become today's heroes on Wall Street. Anything remains possible in today's market where conventional wisdom regularly is proven wrong.

Boeing (NYSE: BA) - The WSJ reported BA to announce new delays in the 787 Dreamliner Program.

BA is recently down $2.19 to $79.68.

BA February option implied volatility of 34 is above its 26-week average of 28 according to Track Data, suggesting larger risk.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Bloomberg News reports that Boeing Co. (NYSE: BA) set another sales record in 2007. While it's not yet clear whether Boeing sold more than its competitor, Airbus, the 1,413 commercial jets Boeing sold last year highlight the power of effective competitive strategy.

I'm in the middle of writing a book about Boeing and have found it fascinating to examine the competition between Boeing and Airbus. In the 1990s, Airbus decided that it could beat Boeing by building the biggest jumbo aircraft on the market. By contrast, Boeing -- which was then under pressure from Airbus -- listened to the airlines and heard them say that they were facing competitive pressure from low-cost, point-to-point airlines like Southwest Airlines Co. (NYSE: LUV) -- whose strategy I analyzed in Value Leadership -- and needed mid-range aircraft that were more fuel efficient.

Boeing is closing-out 2007 in fitting fashion: with yet another order in an already record year for commercial plane orders for the company.

Boeing announced Thursday Australia-based Qantas has ordered 31 more 737-800 commercial jetliners, in a deal worth roughly $2.3 billion, Reuters reported.

The Boeing Company (NYSE: BA) officials told the Puget Sound Business Journal Friday that Qantas' order is the largest order for its 737 class single-aisle plane.

Two years ago, in December 2005 Qantas agreed to buy up to 115 next-generation 787 Dreamliners worth up to $6.1 billion, the Puget Sound Business Journal reported Friday.

The Wall Street Journal reports that Boeing (NYSE: BA)'s 787 Dreamliner is being delayed due to its global value chain. This suggests that despite the best efforts of globalization proponents to extol the virtues of a flat world, there are still some mighty big rocks in its path.

Boeing encountered much bigger challenges than anticipated in its efforts to lower the $10 billion cost of developing the 787 by shifting the job to other companies. It mistakenly thought that it would be easy to snap together at its Seattle-area factory a collection of parts designed and built by worldwide suppliers. The resulting delays have affected 19 of the 52 airlines that have ordered the 787, some of which were counting on using their planes during the 2008 Summer Olympics. Boeing could end up paying millions in penalty payments to customers.

The basic problem Boeing faces is that its suppliers -- instead of using their own engineers to do the design work -- outsourced that work to even smaller companies. And in their eagerness to profit from the 787 windfall, overloaded themselves with work from multiple 787 suppliers. In effect, Boeing is now learning that it did not provide strict enough performance goals to its suppliers. And now it's at their mercy.

The Associated Press reports that The Boeing Company (NYSE: BA) has announced that it's delaying the shipment of its 787 Dreamliner from May 2008 to November 2008. The culprit? Unspecified manufacturing problems.

Boeing CEO Jim McNerney was disappointed with new schedule and said, "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."

It will be interesting to see how Boeing will be able to meet the new deadline without "materially affect[ing] its earnings or guidance for next year." Meanwhile, with its stock down 3%, the market appears skeptical of this claim.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Boeing.

Boeing (NYSE: BA) announced a six-month delay in its planned initial deliveries of the 787 Dreamliner due to challenges in completing the assembly of the first airplanes. First deliveries are now expected in late November or December of 2008.

• BA says: "The financial impact of the delay would not be material to earnings" and its earning guidance for 2007 and 2008 remained unchanged.
  
• BA will provide a quarterly financial update on 10/24.
  
• BA October option implied volatility is at 28, November is at 30 above its 26-week average of 25 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Boeing (NYSE: BA) may be saying that, despite delays in its first flight, the company will deliver its 787 Dreamliner to customers on time next year. But, the company's suppliers are not so sanguine.

According to a Wall Street Journal report: "We looked at each other and said, 'Are they kidding?'" said a senior Boeing supplier who listened in on the conference call in which Boeing broke the news to Wall Street analysts and reporters.

Boeing still has to put hundreds of new parts into the plane. The firm is scheduled to deliver 112 Dreamliners by the end of 2009.

The US company is risking being tagged with the "Airbus' label. The European company has been late getting its newer products off the ground, especially its A 380 super jumbo. The delays have caused customers to migrate to Boeing's latest offerings.

But, what if both companies fall into a cycle of late delivery. For starters, it might allow Airbus to get back into the game with airlines that have been concerned about delivery schedules.

The biggest fallout, however, would be to the efficiency of the global airline industry. New planes are not only more fuel-efficient. but they also do not require the significant overhauls that are needed to keep older models in the air.

In other words, the delays could hurt Boeing's biggest customers.

Douglas A. McIntyre is a partner at 24/7Wallst.com.

The battle between Boeing Co. (NYSE: BA) and Airbus continued in the skies over Paris this week -- although I suppose the real battle occurs in plush sales offices and five state restaurants throughout the city. Billions of dollars in aircraft orders are at stake, and the corporate dog-fighting appears to be intense. The most important competition is between Boeing's 787 Dreamliner and the A350 made by Airbus. These are roughly similar planes featuring twin engines and single aisles, and both are quieter and more efficient than earlier models. Going in to the Paris Air Show, Boeing had a considerable lead over Airbus in worldwide orders for its plane. As Douglas McIntyre noted earlier on BloggingStocks, as of last week, Boeing had over 600 orders for the 787, compared to a mere 13 for the A350.

Airbus has been in trouble lately, particularly with its new jumbo jet, the A380, which was designed to replace Boeing's 747. While there seems to be considerable interest in the new double-decker plane, the A380 has had so many problems that it isn't clear when it will be ready to fly. So Airbus is pushing the smaller A350 in the meantime. But it hasn't had much luck against the 787, at least until now.

So far, the Paris Air Show has been good to Airbus. According to today's Wall Street Journal [subscription], Airbus booked three large orders for the plane from Russia's Aeroflot, India's Kingfisher Airlines and Libya's Afriqiyah Airways, for a total of nearly 80 planes. This comes after Qatar Airlines' order of another 80 planes earlier in the week. The CEO of Airbus, John Leahy, said that he expected to receive more than 200 orders for the plane this year, and these new orders certainly make that seem like an achievable goal.

But Boeing has also seen some big orders in Paris. It just announced that International Lease Finance Corporation, the largest commercial jet leasing company in the world, has ordered 50 787s for its fleet. This means that the 787 has surpassed the $100 billion mark in orders, and secures Boeing's place as the global leader in commercial aircraft production.