The global aircraft business sure is complex. Big companies are both suppliers and customers of each other. There are only two major competitors -- but one new one, backed by the Chinese government -- threatens to alter the structure of the industry. And aircraft are so expensive that financing is the critical fuel that keeps the industry going. Meanwhile, the global economic slowdown threatens to cut demand for air travel and slice that capital flow.

This complexity comes to mind in analyzing a General Electric Co. (NYSE: GE) threat to Boeing (NYSE: BA) -- which it leveled by placing a $750 million order for five aircraft -- with an option to buy 20 more -- with China's Commercial Aircraft Corporation of China (CACC). CACC was formed earlier this year through the merger of China's two state aircraft makers, AVIC I and AVIC. And the expansion does not stop there -- today China announced plans to acquire a foreign general aviation aircraft maker to "shore up its technology capabilities."

GE's CACC buy is hurting one of GE's biggest customers -- that's because GE Aviation sells billions worth of engines to Boeing. And GE's aircraft financing unit -- GE Capital Aviation Services -- is in competition with American International Group's (NYSE: AIG) aircraft financing unit, International Lease Finance Corp. -- which is one of Boeing's biggest customers.

Continue reading As China contracts, GE stabs Boeing in back with China aircraft buy

As China contracts, GE stabs Boeing in back with China aircraft buy originally appeared on BloggingStocks on Tue, 04 Nov 2008 09:58:00 EST. Please see our terms for use of feeds.

Public seen receptive to Wi-Fi fee

Stock analyst and frequent flier C. Leonard Bauer says Internet fees would be "a lucrative revenue stream" for the airlines, and ironically one that will probably be popular with the public.

Continue reading A saving grace for airlines: Wi-Fi in the sky

A saving grace for airlines: Wi-Fi in the sky originally appeared on BloggingStocks on Wed, 06 Aug 2008 14:55:00 EST. Please see our terms for use of feeds.

Boeing's (BA) earnings soar originally appeared on BloggingStocks on Wed, 23 Apr 2008 08:48:00 EST. Please see our terms for use of feeds.

Most of the momentum for aircraft sales has appeared to be with Boeing (NYSE: BA). Its 787 Dreamliner has been selling well despite a delay in launching the plane. Its new stretch 747 has also done well, as have some of the newer versions of its old planes.

Rival Airbus picked up a key piece of business when aircraft leasing company AWAS (Ireland) Ltd.decided to buy 100 of its jets. According to The Wall Street Journal the "jetliners are valued at $6.9 billion." The paper adds, "AWAS Chief Executive Franklin Pray said he was surprised how eager Airbus and Boeing had been for AWAS's business, given the strong demand."

That may get to the heart of the matter. With large production facilities going at full capacity, it is hard to say what Boeing and Airbus are actually charging for their planes. Each is fighting for market share because the demand for big aircraft is not going to stay white hot forever. And, cutthroat competition often means discounting.

When Boeing releases its earnings for the fourth quarter, it will be interesting to see whether its gross margins will stay high. The market is obviously concerned. Boeing trades at a 52-week low.

New airplanes are still selling, but at what price?

Douglas A. McIntyre is an editor at 247wallst.com.

Airbus gets a win over Boeing originally appeared on BloggingStocks on Wed, 09 Jan 2008 09:30:00 EST. Please see our terms for use of feeds.

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.

Continue reading Boeing's 2007 orders set new record as Airbus struggles

Boeing's 2007 orders set new record as Airbus struggles originally appeared on BloggingStocks on Fri, 04 Jan 2008 08:50:00 EST. Please see our terms for use of feeds.

Starting next year, Israel will require pilots who fly to its airports to use the Security Code System (SCS), a local invention designed to ensure planes that have been commandeered for al Qaeda-style attacks are spotted in time. Israel plans a trial run for the system, using a credit card-sized keypad, next month, in cooperation with five airlines from the United States, Europe and Africa. About 10,000 of the units will ultimately be issued, with Israel bearing the cost. Pilots who fail the authentication test when they approach Israeli airspace will be denied entry. Should a plane go ahead, ignoring further warnings, Israel will consider it hostile and scramble fighter planes for an interception. In the worst case, that could mean an aircraft is shot down.

Several experts familiar with Israeli methodology say the system -- also known as "Code Positive" -- is based on the assumption that a hijacking will take place in one of two ways. Hijackers could either kill the pilots and take control -- as is believed to have been the case in the September 11 attacks on the United States. Or they could force pilots to issue a compliant response to the system in the hope of buying enough time to reach Israel and crash the planes into a target on the ground. In the first case, the hijackers would fail the security check as they entered Israeli airspace, giving military authorities about 15 minutes to launch a response. In the second, Dani Shenar, chief of security for Israel's Transportation Ministry said, pilots would be expected to relay a "May Day" alert.

Let's all hope that this system is never put to use, but in the event of a hijacking, this Israel system could save hundreds of lives.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Author holds a position in ESLT as of 11/21/07.

Israel launches anti-hijack system originally appeared on BloggingStocks on Wed, 21 Nov 2007 18:00:00 EST. Please see our terms for use of feeds.

Remember when Boeing was a laughingstock? originally appeared on BloggingStocks on Wed, 24 Oct 2007 12:20:00 EST. Please see our terms for use of feeds.

Bloomberg News reports that Boeing Co. (NYSE: BA) beat and lowered. But the market is applauding -- lifting its shares 1.6% in pre-market action.

The market likes nothing more than a company that beats earnings estimates and raises its sales and profit guidance. But Boeing seems to have exceeded expectations while lowering guidance -- albeit less than expected. Boeing reported that its earnings rose 61% in the third quarter as it increased production to deliver nine more jetliners than a year earlier.

Its earnings and sales exceeded expectations. Net income increased to $1.11 billion, or $1.44 a share, from $694 million, or 89 cents, a year earlier. This was 18 cents a share about the $1.26 a share that 11 analysts surveyed by Bloomberg expected. Revenue of $16.5 billion exceeded the analysts' $16 billion forecast.

Continue reading Boeing's earnings report lifts shares off the runway, despite lower guidance

Boeing's earnings report lifts shares off the runway, despite lower guidance originally appeared on BloggingStocks on Wed, 24 Oct 2007 09:06:00 EST. Please see our terms for use of feeds.