It's a macroeconomic headwind that could produce a jetliner order headwind.

International Lease Finance Corp. said it may order 300 jetliners from Boeing and Airbus to meet lease demand from airlines that can no longer afford to buy their own planes, Bloomberg News reported Wednesday.

International Lease said it may purchase 150 single-aisle aircraft from each aerospace company. The orders would be worth about $22 billion at current plane prices, exclusive of discounts.

Boeing (NYSE: BA) shares fell $4.83 to $69.99 on the news, while Airbus's parent EADS' shares rose 39 euro cents to €12.95 in afternoon trading in Paris.

High oil prices take a toll

Stock analyst C. Leonard Bauer told BloggingStocks Wednesday the era's record-high jet fuel prices are beginning to take a toll on airline business models. "If high prices, basically oil above $120 a barrel, persist, you will see order cancellations, and more postponements, in the U.S. and abroad," Bauer said. "Some airline business models just won't work with oil at $120-$125 or higher, so you will begin to see order delays and cancellations." Bauer added that he does not have ratings on, nor own shares in any airline or airline manufacturer.

The Government Accountability Office has decided that the Air Force has done Boeing (NYSE: BA) dirty. It says that in the bidding process for a new air tanker, the Air Force should not have favored Northrop-Grumman (NYSE:NOC) for the project. NOC won the tanker deal several months ago.

The Wall Street Journal reports that the decision "effectively gives Boeing the chance to recapture its decades-long lock on the business of supplying planes that can refuel other planes in midair." The GAO said the Air Force analysts had made mistakes in some of their evaluation analysis.

The whole matter stinks. Boeing has been able to push its agenda in Washington by lobbying hard to keep jobs for the tanker in the US. The Northrop proposal would have had EADS, the European airplane maker, do some of the work. Several senators got behind the idea that Boeing should get another chance.

Was the GAO influenced by Congress? Who will ever know, but if Boeing, which is the incumbent for supplying the military tankers, can get into the position to bid again, something seems a bit off.

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

Airbus said 2008 orders for the A380 superjumbo jet may be one-third lower than previously forecast, as higher fuel costs and an economic slowdown moderate travel growth, Bloomberg News reported Wednesday.

Airbus said it may receive about 20 orders in 2008 for the 525-seat A380 superjumbo, the world's largest commercial jetliner. Earlier, Airbus had projected up to 30 orders for the A380 in 2008.

Airbus' announcement did not negatively impact the stock, at least not at the outset. Shares of Airbus' parent EADS gained 28 cents to 14.95 euros in Wednesday afternoon trading on the Paris exchange.

Airbus has again delayed delivery of selected A380 superjumbo jets, saying the company's transition to automated production is behind schedule.

Airbus now expects to deliver 12 A380 planes in 2008, down from 13, and 21 planes in 2009, down from 25, the company announced Tuesday.

Promoted as the world's most economical, large aircraft, the A380 is about two years behind schedule. The A380 will seat 525 passengers in a normal configuration, at least 50-120 seats more than its chief competition, Boeing's (NYSE: BA) 747, the wide-body industry standard.

In Europe, shares of Airbus's parent EADS were virtually unchanged on the news, down just 2 euro cents to 12.72 euros in afternoon trading. Boeing's shares gained five cents to $84.87.

Today's Washington Post reports on the latest successful purchase of John McCain's services -- yielding a sweet real estate deal for an Arizona developer in the wake of his $100,000 campaign contribution. But that railer against the role of money in politics appears to have been bought many times before -- and American workers and taxpayers have paid the price.

The Washington Post reports that McCain pushed legislation that let an Arizona rancher trade remote grassland and ponderosa pine forest there for acres of valuable federally owned property that is ready for development, a land swap that now stands to directly benefit one of his top presidential campaign fundraisers. Specifically, Steven A. Betts, who raised $100,000 for McCain, got the job of developing rancher Fred Ruskin's land after McCain's legislation helped Ruskin pick it up at below market rates.

But this is at least the fifth transaction where a campaign contributor has benefited from McCain's power. Here are five others:

Boeing (NYSE: BA) is thumping its chest about the likelihood that it can get Congress to reverse a deal giving a $35 billion military tanker contract to Northrop Grumman (NYSE:NOC) and EADS, the parent of Airbus.

According to Reuters Mark McGraw, a company vice president, said he was "as confident as I can be" that congressional auditors would find fault with the U.S. Air Force's February 29 choice of the rival team. Brave words, especially when the Air Force claims that the Boeing proposal lost on every key metric for building the tanker.

Boeing is counting on members of Congress who don't want American jobs to go overseas to push back on a contract which includes Europe-based EADS. But, it may not be that simple.

The Wall Street Journal reports that "Government contracting documents show that the U.S. Air Force preferred the size and capability of aerial refueling tankers" being offered by EADS and Northrop. The EADS Airbus 330 can carry more fuel that its Boeing competition.

Boeing is almost certainly wasting its time. No matter how much some Congressmen would like to save jobs for their districts, they cannot be seen as favoring a deal which is probably substantially inferior.

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

Boeing Co. (NYSE: BA) filed a formal protest this week against the U.S. Air Force's decision to award its $35 billion contract for refueling tankers to EADS, the parent of Europe's Airbus. The value of the contract could grow to $100 billion over the life of the program, and Boeing is not going to let that money slip away easily.

The decision has generated a lot of political heat in the U.S., as politicians decry the loss of American jobs and American profits. The problem is, though, that the United States loses no matter which firm gets the contract.

If Boeing is given the contract, the U.S. gets lower quality planes in smaller numbers. By all accounts, the Boeing tanker, based on the 767, is smaller and older than the EADS tanker, based on the larger and newer Airbus A330. And EADS promised to deliver more of the planes at an earlier date. As BloggingStocks' Peter Cohan wrote when the decision was made, the choice between the two planes wasn't close on the merits.

On the other hand, if EADS gets the contract, the U.S. loses tens of thousands of high-paying, high-tech defense jobs. Boeing claims the contract would provide over 40,000 jobs. Although EADS claims that it would assemble its planes in the U.S. and provide roughly 20,000 American jobs, it's pretty clear that most of the tanker-related jobs would be in Europe, where most Airbus parts are made.

So it's a lose-lose situation. Either you get jobs, exorbitant corporate profits and inferior planes, or fewer jobs, no (American) profits and superior planes. Usually, our lion-hearted men and women of the U.S. Congress chooses the former course. We'll see if their preference for the latter will survive the growing political storm.

The Associated Press reports that John "Freedom Fries" McCain employs former lobbyists for EADS, the parent of Toulouse, France-based Airbus, on his staff. EADS and Northrop Grumman (NYSE: NOC) recently won a $100 billion contract to build refueling tankers for the Air Force, edging out Boeing Inc. (NYSE: BA) which has filed a protest.

McCain now employs the people who lobbied for EADS on his own staff. According to the AP report, EADS retained The Loeffler Group to lobby for the tanker deal in 2007. Loeffler Group lobbyists on the project included Tom Loeffler, who lobbies for EADS and serves as McCain's national finance chairman; Susan Nelson, who left Loeffler and is now the campaign's finance director; and former Secretary of the Navy William Ball III, who has campaigned for McCain.

EADS also had a long-term relationship with Ogilvy Government Relations, formerly known as the Federalist Group. Ogilvy lobbyist John Green, who records show worked on the EADS account, recently took a leave of absence to volunteer for McCain as the campaign's congressional liaison.

The New York Times reports that one reason Boeing Co. (NYSE: BA) may have lost the $100 billion contract to build tankers -- in-flight refueling aircraft -- for the Air Force because the winners -- Boeing's arch-rival, EADS, parent of Toulouse, France-based Airbus and Northrop Grumman (NYSE: NOC) -- took a big risk to demonstrate their commitment to the project.

Specifically, EADS/Northrop made a $100 million bet -- by building a state-of-the-art refueling boom that would funnel the fuel from the tanker to the fighter aircraft in the air -- with no assurance that it would win the contract. Meanwhile, analyst Loren Thompson said that Boeing seemed arrogant and offered a plan that Air Force officials thought would deliver only 19 tankers by 2013 compared with 49 by EADS/Northrop. Thompson even accused Boeing of being unresponsive and impolite.

Much remains up in the air. EADS/Northrop claims its tanker can carry more fuel than Boeing's modified Boeing 767. EADS/Northrop believes its bid also offered more flexibility for carrying cargo, transporting troops, airlifting refugees and delivering humanitarian aid. And there's a dispute about how many U.S. jobs will be created by each. Boeing said its bid would create or support 44,000 American jobs. EADS/Northrop's figure was 25,000 jobs in 49 states.

Boeing may decide to appeal this contract award. Then the General Accounting Office (GAO) will have 100 days to rule on the appeal. Meanwhile, the Air Force claims it bought the better plane.

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 the securities mentioned and is working on a book on Boeing.

Boeing Co. (NYSE: BA) and Airbus go toe to tor for almost very major commercial airline contract in the world. They haul each other into court over international trade practice questions. For pure blood sport, the competition can hardly be matched.

Over the course of the last week, the battle between the two companies moved up a notch as the Air Force gave a $35 billion tanker program to Northrop Grumman Corp. (NYSE: NOC) and EADS, the parent of Airbus. Members of Congress may try to keep the deal with Boeing, and the issue should be messy for several months.

While Boeing and Airbus beat the living daylights out of one another, China is planning to begin to build its own large commercial aircraft. China is one of the biggest markets for the two airplane company leaders, and as the need of big jets there increases, the Asian company was going to be a meal ticket that might last for decades.

Things are not going as planned. According to The Wall Street Journal (subscription required), "China has confirmed plans to set up a company to make large passenger airplanes." The paper also writes that Boeing thinks China will need over 3,300 new jets by 2026.

China could be making its own planes by then, leaving Boeing and Airbus to bicker over military contracts.

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

Boeing Co. (NYSE: BA) stock is falling this morning after the company lost a $35 billion contract which was awarded by the U.S. Air Force to two of its rivals. Under the contract, European Aeronautic Defense and Space Co. and Northrop Grumman (NYSE: NOC) will build as many as 179 KC-45A refueling tankers for the Air Force. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on BA.

BA hit its 52 week high of 107.83 in July and set its 52 week low of 74.12 in January. This morning, BA opened at $79.32. So far today the stock has hit a low of $79.25 and a high of $80.89. As of 12:35, BA is trading at $80.34, down $2.45 (-3.0%). The chart for BA looks neutral and improving while S&P gives BA a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $90 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 7.5% return in one and a half months as long as BA is below $90 at April expiration. Boeing would have to rise by more than 12% before we would start to lose money.

BA hasn't been above $90 since December and has shown resistance around $85 recently. This trade could be risky if the economy bounces back strongly, but even if that happens, this position could be protected by the resistance BA should find around $85.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in BA.

Despite the hue and cry that American interests were hurt when the U.S. military gave its new tanker order to Northrup Grumman Corp. (NYSE: NOC) and EADS, the parent of Boeing Co. (NYSE: BA) rival Airbus, one big company based in Connecticut did very well. That would be General Electric Co. (NYSE: GE).

According to the Business Courier, "the planes will be powered by GE's CF6 jet engines." Due to the large number of planes involved, GE will build 400 engines and bring in about $5 billion.

The news adds to the economic complexity surrounding the politics of the contract. A number of congressmen believe that a company based in France, EADS, should not be building planes for the U.S. military. Picking Boeing, based in Chicago, would have been a more patriotic decision.

But, the math may not be all that simple. Northrop Grumman is clearly a U.S. company, and GE is getting a huge contract. There is no saying that Boeing might not have used Rolls Royce engines and other significant components from other countries.

The military award may be better for U.S industrial interests than most people think

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

The New York Times reports that Boeing Co. (NYSE: BA) has lost a $40 billion deal for airborne tankers that refuel fighter jets for the Air Force. The winning suppliers are Northrop Grumman (NYSE: NOC) and EADS, the parent of Boeing's arch rival, Airbus.The deal, which puts a critical United States military contract partially into the hands of a European company, calls for spending up to $40 billion to replace the Air Force's aging aerial tanker fleet of 535 Boeing 707s and DC-10s.

This comes as a major blow to Boeing. Its CEO, James McNerney, had been brought into his position in 2005 to clean up the company after several significant ethics problems -- including a deal to hire the Air Force's second ranked weapons buyer, Darleen A. Druyun, her daughter and son-in-law in return for steering the tanker contract and billions of dollars of other Air Force business to Boeing. Soon after joining Boeing at a $250,000-a-year post, Druyun and Michael Sears, Boeing's former CFO, pleaded guilty in the scandal and received prison terms.

Since I am working on a book on Boeing, I was very focused on this contract award. A win would have been a big benefit to shareholders after McNerney's efforts to cure Boeing of its ethics problems. The loss of this contract -- which could total $100 billion -- is a big setback.

Boeing's stock fell $2.01 during the market today and an additional $2.68 after hours.

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 the securities mentioned.

After the market close, the US military announced that it was giving its new tanker refueling contract to Airbus parent EADS and Northrop Grumman Company NYSE: NOC). The market believed that The Boeing Company (NYSE: BA), which has been supplying tankers for years, was a lock to get the deal.

The news is a stunning turnaround for Airbus since its planes will be adapted for military use. A year ago the European airframe company was in real trouble because of product delays. But, the tables have been turned recently. Boeing has been slow getting its new Dreamliner to customers. The plane has been delayed twice.

According to The Wall Street Journal "Under the contract, the Northrop-led team will build up to 179 tankers based on the Airbus A330 jetliner." The deal is valued at $40 billion.

Shares in Boeing are down over 3% after hours and NOC is up 5.7%.

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

Airbus announced Wednesday that it beat rival Boeing in 2007 deliveries but trailed it in new orders.

Airbus said it delivered 453 planes to Boeing's 441 in 2007, according to a company statement. Meanwhile, Boeing (NYSE: BA) bested European-based Airbus in 2007 net new orders, 1,413-1,341. Airbus' 2007 delivery total was up 19 from 2006's 434. Airbus said it expects to deliver 470 planes in 2008.

"2007 was a challenging year but also successful year for Airbus," Airbus President and CEO Tom Enders said. "We were successful in the market and mastered the industrial challenges of the production ramp up, the timely delivery of the first A380, and the implementation of the Airbus Power 8 turn-around program. 2008 will be as challenging on all fronts. But I am sure that, with the dedication of our people and all involved, we shall master them. On the commercial side, I anticipate that our order intake will be above our deliveries."

Delay city

Airbus has been plagued by a series of production setbacks as it rolls-out two new commercial aircraft deemed critical to the aerospace giant's early 21st century aviation strategy: the 500-seat A380 superjumbo jet and the A350.