Despite excellent earnings from Boeing Co. (NYSE: BA) yesterday, a bit of a shadow still hangs over the company. That's because in February the Air Force awarded a $100 billion contract for in-flight refueling craft -- known as tankers -- to EADS's Airbus and Northrop Grumman (NYSE: NOC). Boeing is currently challenging this award. But an interview I did for my book on Boeing suggests that Boeing will not win this contract because George W. Bush and John McCain want to award the contract to Bush's new friends: France's Nicolas Sarkozy and Germany's Angela Merkel.

I got this theory from a veteran Wall Street analyst who covers the aircraft industry. He suggested that Boeing lost the Tanker bid because John McCain -- who is ranking member on the Senate Armed Services Committee -- had the Air Force change the specifications for the tanker bid so Airbus and Northrop would be able to field a competitive bid. My source noted that the one problem with the change was that the Air Force did not inform Boeing about it.

After the bid was awarded to Airbus, it became clear that the original specifications had changed from a small, 767-sized craft to a medium-sized 777 one. During the review process, my source contends that Boeing asked the Air Force if the 767-sized craft was what it wanted. Boeing also told the Air Force that it would be happy to bid with a different model if the Air Force wanted. But the Air Force told Boeing that it still wanted the 767-sized craft.

If Boeing (NYSE: BA) were writing for BloggingStocks:

We have a great article for you; the best you've ever read. It will save you a ton of money, bring back your youth, enlarge your penis or bust line, cure cancer, solve global warming, eliminate the national debt, provide jobs to all Americans, is family-values friendly, tastes delicious but is calorie-free, is hilarious without demeaning any race or sex, and will remain relevant for at least the next twenty years.

Unfortunately, posting of this article will be delayed due to a worldwide shortage of ampersands and the outsourcing of verbs to China. Look for this article in the first third quarter of 2008 2009, although we're happy to take orders (and prepayment) for it at any time.

Until then, you'll have to be satisfied with more of our same old bologna. But the article will be worth the wait. And don't pay any attention to those Europeans promising just as good an article. They don't even speak our lingua franca, do they?

It's not bad enough that air travelers are facing more and more delays, and airlines are canceling more and flights, but along comes airplane maker Boeing (NYSE:BA) announcing that its 787 Dreamliner is going to face a delay of at least 14 months until deliveries are made.

According to the AP report: "The Times of London reported on its Web site late Wednesday, quoting those familiar with the matter who asked not to be identified, that delays for 787 could reach 18 months, while the Seattle Post-Intelligencer put the delay at 14 months from the original goal."

What's with this industry? Why can't anything be on time?

With three airlines going bankrupt in the last week alone, the industry is a mess. It's no wonder Boeing announced the delay because it needs to really make sure that the plane is sound structurally. The Seattle Times had a story about airline woes and reported: "American, Delta and United airlines recently canceled flights to perform unscheduled inspections of certain aircraft, and US Airways found problems on some Boeing 757s after a wing part on one of its planes fell off during a flight."

With the busy summer travel season fast approaching, travelers better plan for even more delays.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/9/08.

The Associated Press reports that Boeing Co. (NYSE: BA) has announced that it will delay the delivery of its 787 Dreamliner again -- for the fourth time. Specifically, Boeing now expects to deliver in the fourth quarter of 2008 and it says it is building extra time into the testing schedule to reduce the risk of further delays. Delays for 787 could reach between 14 and 18 months from the original goal of September 2007.

I am working on a book about Boeing and I've found two schools of thought on the 787. One school thinks that delays of this nature are normal for an aircraft that uses so much new technology. Airbus has had multi-year delays with its A-380, for example. Another school of thought suggests that Boeing has regally mismanaged its relationships with its suppliers. It outsourced both the design and manufacture of the 787 to suppliers around the world. The idea was that the suppliers would produce all the parts and ship them to Boeing's factory in Washington state. Then Boeing would then snap the pieces together in a few days.

MAJOR PAPERS:

• In an effort to increase sales in the Middle East, the Wall Street Journal reported that Dell Inc (NASDAQ: DELL) is in talks with a government-owned vehicle in Dubai called Tecom about establishing a joint venture.
• The Wall Street Journal also reported that Washington Mutual Incorporated (NYSE: WM), which obtained a $7B capital infusion from TPG and other investors, had reportedly been working on the TPG deal while negotiating with JP Morgan Chase & Co (NYSE: JPM), which made a preliminary takeover bid of about $7B, people familiar with the deal said.
• Citigroup Incorporated (NYSE: C) is close to reaching a deal to sell $12B in leveraged loans at a discount to a group of leading private equity firms, the Financial Times reported. Although details of the deal were still being worked out, inside sources said Apollo Management, The Blackstone Group LP (NYSE: BX) and TPG would buy the loan portfolio at a discount that could come in at about 90 cents on the dollar.

OTHER PAPERS:

• The UK Times reported that The Boeing Company (NYSE: BA) is today expected to announce that its 787 Dreamliner has been delayed by 18 months, a setback which will affect all airlines that have ordered the 787, including British Airways Plc (OTC: BAIRY) and Virgin Atlantic.

MAJOR PAPERS:

• General Motors Corporation (NYSE: GM) and Ford Motor Company (NYSE: F) want to export more of their vehicles around the globe, and are getting a lift from new labor contracts and the weak dollar, which they believe will translate to bigger profits, the Wall Street Journal reported.
• The Wall Street Journal also reported that former Fed chairman Alan Greenspan has been criticized for how he handled the economy before retiring two years ago, and is under attack for policies that many say started the current financial crisis.

OTHER PAPERS:

• According to a person with knowledge of the matter, the Seattle Post-Intelligencer reported that The Boeing Company (NYSE: BA) is likely to announce a new delay of at least six more month for the 787 Dreamliner this week.

WEB SITES:

• According to 'numerous sources,' Housing Wire reported that Washington Mutual Incorporated (NYSE: WM) may have decided to exit wholesale mortgage origination.

FT.com reports that Boeing's (NYSE: BA) biggest customer believes that its 787 Dreamliner will be delayed even further due to a redesign of the part of the plane where the wings attach to the fuselage. Steven Udvar-Hazy, chairman of International Lease Finance Corporation (ILFC), the 787's biggest customer warned that the 787's first deliveries would be delayed for at least another six months because its center wing box – which holds the wings in place – needed to be redesigned. Yvonne Leach of Boeing said: "We are doing some redesign work but things are more complex than what he said. There's a whole load of things going on."

On the plus side, Boeing has received 857 orders for the 787 totaling $140 billion. On the minus side, Boeing originally planned to deliver the 787 in May 2008. I have lost track of the precise number of announced delays in the 787's delivery. Hazy said he expected delivery of the long-range, 250-300 seat jet to be delayed until the end of the third quarter of next year. Boeing's most recent guidance was that the Dreamliner would be ready "early" in 2009.

Many of the people I interviewed for my book on Boeing are not very concerned about the delay -- saying that Boeing is committed to getting it right and that delays are normal for a new program with new technology. But with the penalty payments for late delivery, the low prices needed to close deals, and the higher costs required to fix the problems, Joseph Nadoll of JPMorgan Chase & Co. (NYSE: JPM) suggests a steady "eating away at program margins and long-term program profitability."

Boeing stock -- which lost 4% of its value yesterday -- was up about 1% in after-hours markets.

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 writing a book on Boeing.

"Although Boeing Co. (NYSE: BA) has had a tremendous run, I'm still a believer," says Glenn Rogers, contributing editor to Gordon Pape's Internet Wealth Builder.

He explains, "Given the crazy markets we are experiencing, I believe Boeing has some defensive qualities that should prove helpful while we wait to see whether we have a recession on the near-term horizon.

"For some time, the upstart European consortium that produces Airbus was kicking Boeing's behind and carving deeply into the U.S. company's market share. Things looked bleak for a number of years.

"Then, someone had the bright idea to launch the 787 Dreamliner, a sleek, fuel-efficient plane that seems perfectly designed for the global warming world of the 21st century.

"Airbus, on the other hand, decided that bigger was better and placed its bets on a Superjumbo jet, the A380. It's a double-deck behemoth that can cram as many as 853 passengers into an all-economy configuration.

Boeing Co. (NYSE: BA) today reaffirmed its outlook for 2007 and 2008. The outlook, which calls for strong double-digit earnings and revenue growth, is consistent with the new 787 Dreamliner jet. Naturally, the stock is down 0.9% to $95.59 with less than an hour left in the trading day. Investors, or at least it seems these days, always want more. The outlook in numbers: $4.55-4.75 earnings per share (EPS) and $64.5-65 billion in revenue for 2007; $5.55-5.75 EPS and $71-$72 billion in revenue 2008. The company will probably pay higher dividend for 2008.

These are crucial times for Boeing. The company has 568 orders lined up from 44 companies for the new jet and had just opened an assembly plant for the Dreamliner on Monday in Everett, Washington. The 787 parts will be flown from all over the world and be put together into the Dreamliner in the new plant.

July 8 was set as the date the first airplane should be ready with the first flight scheduled for mid-August. That's provided everything works well, of course. All Nippon Airways, Boeing's first customer, should receive its first Dreamliner in May, 2008. It's definitely crunch time for Boeing, as Stanley Holmes writes in BusinessWeek. So if there are no more delays from suppliers (as there have already been), other production challenges, and if Boeing can overcome the fastener shortage (currently the fuselage is held by temporary fasteners), then, perhaps, Boeing might make it in time and start collecting the money -- most of the money is collected during the delivery.

To add to investors' concerns, Boeing's Chief Executive Jim McNerney said that he expects a third airplane maker to emerge, probably in China, to challenge Boeing and its rival Airbus in coming decades. However, McNerney also said Boeing is considering buying back additional company stock.

No doubt there are challenges ahead in Boeing's near-future, but I trust the company can overcome them relatively painlessly if the path it took to where it is today with the Dreamliner is any indication of management and engineering quality.

Boeing Co. (NYSE: BA) just got two more orders for its new carbon-composite 787 Dreamliner jet. At list price, these orders are worth more than $7 billion, although discounts are norm in the industry.

Air Canada said today it is increasing its original purchase of the 787 commercial aircraft by 23 planes, raising the total order to 37. Deliveries of the plane would start in 2010. The 23 planes carry a list price of about $3.7 billion. Air Canada also reduced its original Boeing 777 firm order by two.

Meanwhile, according to different sources, Virgin Atlantic Airways will also buy 15 planes valued at $2.8 billion at list prices with an option buy up to 24 Boeing 787s Dreamliners.
Virgin and Boeing also announced an environmental partnership that includes a joint biofuel demonstration aimed at developing sustainable fuel sources suitable for commercial jet engines and the aviation industry. The demonstration is being worked jointly with GE Aviation and Virgin Fuels.

Many 787 parts are made of carbon-fiber composites, which are lighter than the metal usually used to build aircrafts, making it more fuel-efficient and resistant to corrosion. The Dreamliner uses 20% less fuel compared to similar sized airplanes and provides airlines with up to 45% more cargo revenue capacity. It is designed to have lower carbon emissions and quieter takeoffs and landings. There is also a new interior environment with higher humidity, wider seats and aisles, larger windows, and other conveniences. The Dreamliner is scheduled to make its first flight in August and to enter commercial service next year.

So far, the Boeing 787 Dreamliner is a big hit with 544 orders from 44 customers (not including today's announced orders). As BA shares reached a new 52-week high today, do they still have room to soar with its Dreamliner? Remember, Prudential upped its target on BA to $103 just yesterday.

Just when you think Airbus is about to finally assert itself -- perhaps right itself is the more appropriate phrase -- against Boeing Co. (NYSE:BA) in the commercial aviation sector, up pops another gremlin.

On Tuesday, word surfaced that Airbus' co-owners Germany and France were again at odds, this time over the size of expected job cuts at the world's second major commercial jet manufacturer.

France and Germany jointly control Airbus through ownership of its parent company EADS. EADS' shares closed Tuesday in Europe at €25.95, up 11 cents. Boeing's shares closed Tuesday at $91.03 up 9 cents.

French Prime Minister Dominique de Villepin said Tuesday he had talked with German Chancellor Angela Merkel about Airbus's difficulties and confirmed that the company is seeking to slash 10,000 jobs as part of its restructuring plan. German politicians suspect Toulouse-based Airbus's French management of forcing German workers to bear a disproportionate share of the cuts. Arnaud Lagardere, the head of a French coalition, does not deny that his country is trying to protect France-based jobs.