General Dynamics (NYSE: GD) turned in a quarterly profit that beat expectations. The business of battle overshadowed aviation industry contraction, which contributed to the result. Thanks to the strong Q3, General Dynamics has raised its profit forecast for the year.

JPMorgan analyst Joseph Nadol wrote to his clients this morning that "the stock has been strong recently" and "there is no denying that the company posted good results." But, he also observed that the near-term upside is limited, because investors expected a solid Q3, and the company still faces some pressure from a pretty sharp drop in its aerospace backlog.

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.

Boeing Co. (NYSE: BA) shares fell after the second-largest commercial plane maker reported disappointing second quarter earnings.

Net income dropped 19% to $852 million, or $1.16 a share, from $1.05 billion, or $1.35 a share, a year earlier, the Chicago-based company said in a statement. Revenue was flat at $17 billion. The results fell short of the $1.22 profit estimate and the $17.3 billion revenue estimate of analysts surveyed by Bloomberg News.

Boeing reaffirmed its 2008 earnings per share guidance of between $5.70 and $5.85 as well as its 2009 earnings per share guidance of between $6.80 and $7.00.

"While we faced some challenges this quarter that affected our results, we remain confident in our outlook for the remainder of this year and 2009," said Chairman, President and CEO Jim McNerney in the earnings release. "Strong global demand for our products and services, a record backlog, and a sustained focus on productivity improvement and execution will continue to drive growth and profitability for this company."

Bloomberg News reports that Boeing Inc. (NYSE: BA) is delaying the delivery of its 787 Dreamliner into 2009. It already delayed it from May 2008 to November 2008 several months ago. This may well be the biggest business blunder of its CEO's stellar career.

Since I am writing a book about Boeing and its CEO James McNerney, I have been very focused on his career. And he has had an almost unbroken track record of spectacular success in everything he's done. He was a hockey and baseball player at Yale; went on to Harvard Business School for his MBA. Then he went from Procter & Gamble (NYSE: PG) to McKinsey & Co. to General Electric Company (NYSE: GE), where his 18-year career ended just short of succeeding Jack Welch.

After jumping from GE to 3M Co. (NYSE: MMM), McNerney took over Boeing in 2005 and the company's stock rose dramatically until it became increasingly clear that Boeing would not be able to meet its original delivery deadlines for the 787 Dreamliner. Boeing now claims that the 787 will fly for the first time near the end of the second quarter of 2008 and won't ship to the first customer, All Nippon Airways Co., until 2009. Both dates were pushed back by about three months.

CHC Helicopter Corporation (NYSE: FLI), headquartered in British Columbia, is the world's largest supplier of helicopter services to the oil and gas exploration and drilling industries. The company recently posted impressive second quarter (2Q) FY 2008 results that showed revenue up 17% and operating income up 21%. Operating income increased at the same time as corporate expenses declined. Net earnings for 2Q rose 20%, driven in large part by global operations revenue increase of 34% and European operations revenue increase of 14%.

CHC Helicopter took delivery of 8 new aircraft during the quarter, with 16 more to be delivered in FY 2008, and an additional 61 aircraft on target for delivery over the next 5 years. In order to service its expanding fleet, CHC is expanding its own maintenance capabilities at its new maintenance facility currently under construction. Because CHC is in the midst of a growth period, leasing expenses continue to increase, as do interest expenses and debt levels. These expense increases continue to be more than offset by increases in flying (billable) hours and a growing customer base.

Many of CHC's customers do business in risky areas of the world. Conservative investors will want to take a close look at the company's risk management policies while performing their normal due diligence.

Look for Textron (NYSE: TXT) to continue to benefit from the global economy's tailwind.

Strong global economic growth should continue to generate solid demand of the company's Cessna jets and planes, which accounted for 51% of its profits. Further, analysts expect Textron's Bell division to perform well in 2008-2009 on strong commercial and military helicopter orders.

Textron's Industrial division should also post solid results, manufacturing everything from golf carts to lawn care machinery to auto parts. A decent, stable dividend adds to the mix. The Reuters F2007/F2008 EPS consensus estimates for TXT are $3.49/$4.09.

Only with Israeli ingenuity can you take a technology that was once reserved only for video games and make it functional in the real world. The news that Israel has launched the anti-hijacking pilot ID system developed by Elbit Systems(NASDAQ:ESLT) is good not just for the company, but for air travel as well.

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.

Regarding the Dubai Air Show, it looks like Boeing (NYSE: BA) and Airbus are eyeball-to-eyeball, and so far, neither has blinked.

This year's Dubai Air Show has ensured that 2007 will be a record year for commercial jetliner orders, Reuters reported, with the two aerospace giants signing more than $82 billion in orders at the show.

For 2007, Airbus' orders should surpass the 1,111 amassed in 2005, Chief Executive Officer Tom Enders said. Boeing, which had 956 orders through Oct. 6 and does not forecast orders, is within 66 planes of having its third straight record year, Bloomberg News reported.

Do you want the bad news or the good news first? US Airways Group (NYSE: LCC) said this morning that second-quarter profit dropped 14% amid higher maintenance costs and additional expenses. On the plus side, however, the carrier's quarterly results topped Wall Street's expectations.

During the latest reporting period, quarterly earnings fell to $263 million, or $2.77 per share, from $305 million ($3.25 per share) in the prior year. Excluding items, LCC would have banked $2.74 per share, a dime better than analysts' consensus view.

Revenue edged lower to $3.16 billion from $3.17 billion last year, matching Wall Street's target.

In an accompanying statement quoted by the Associated Press, Chairman and CEO Doug Parker noted that the airlines "strengthening revenue environment" should continue to offset increased fuel costs.

Fun fact: US Airways' stock symbol, "LCC," reportedly alludes to the phrase "low-cost carrier."

Speaking of low cost, the stock is indicated lower in pre-market action, down roughly 2.5%. Since mid-January, the shares shares have been stifled beneath technical resistance at their 20-week moving average. In recent weeks, the stock has attempted to challenge this trendline but has had little luck. A negative move today could drop the shares beneath their 10-week moving average as well, below which the company has not traded since late June.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

All of the sales and order announcements of the past six months have shown up in Boeing Co.'s (NYSE:BA) second quarter earnings announcement. The company reported strong quarterly EPS of $1.35, well above Thompson-compiled analyst expectations of $1.16 and 2006's year/year adjusted EPS of $.56. Operating earnings broke $1.5 billion.

The strong performance came primarily as a result of more plane deliveries and strong orders for the 787 Dreamliner. Orders in turn can be credited to airlines upgrading aging fleets and increased fuel costs, which make the efficient Dreamliner more desirable. The company finished the quarter with $279 billion in orders to be filled.

Boeing Co. (NYSE: BA) today obliterated Wall Street earnings estimates, reporting a second-quarter profit of $1.1 billion, or $1.35 per share, compared with a loss of $160 million, or 21 cents, a year earlier. Revenue skyrocketed 14% to $17 billion. Analysts had expected earnings of $1.16 and revenue of $16.2 billion, acccording to Thomson Financial. It also raised its 2007 outlook. For earnings release click here, AP story click here. and Bloomberg News story click here. Detailed post to follow later.

General Electric Company (NYSE: GE) has a webcast of the one hour long webcast done this morning at 8:30am. It covers GE's 3rd Quarter Financial Report and their 4th Quarter outlook. Here is a summary of the webcast.

Jeff Immelt comes on and reviews that it was a strong quarter for GE. Their environment is solid, global infrastructure spending is up, emerging market growth is strong, and the US consumer is strong. Inflation and interest rate are there, but are factored in. Plastics hasn't been able to offset inflation, however. GE is looking to improve on that next year. Again, the overall environment is very strong for GE.

There are five key performance metrics, and all of them show improvement and growth. Revenue was up, assets were up, earnings per share were up, return on capital was up, and margins were all up.

GE's long term strategy, Jeff Immelt reiterated, was to build great business. Infrastructure segment was up, NBC is rebounding, and Jeff expects NBC to show positive growth in the fourth quarter. Profit growth was up around the company, and NBC was mentioned again, this time pointing out that their primetime ratings were up 15%. Across GE orders were up 15%, organic growth is up for the 3rd quarter in a row, and service growth was up as well.

Growth is a big push inside the company, and GE has enjoyed seven quarters in a row of growth at 2-3X GDP thanks to technology and services. Aviation has a big backlog. The imagination breakthroughs are delivering growth and products. Global growth is up, and growth in developing countries is up 22%.

At this point Jeff Immelt hands off the webcast to Keith, who starts delving into the nitty gritty.

As all of China begins to gear up towards the 2008 Olympics, China Southern Airlines recently placed a quarter-billion dollar order with GE Aviation.

China Southern Airlines is expanding both its domestic and its international routes. It has signed financing and maintenance agreements with GE Aviation's OnPoint program for the purchase of the next generation of jet engines currently under development by GE Aviation.

China Southern Airlines already has 10 Boeing 787 wide-body Dreamliner aircrafts on order. The latest-generation technology jet engines from GE will be used to power the new 787s. GE Aviation has orders for more than 600 of the GEnx engines from both military and commercial customers. China Southern Airlines hopes to begin delivey of the newly equipped 787s in early 2008, in time for use during the Olympics.