EADSY.PK

How Profitable is Boeing’s 787 Dreamliner? Not Very.

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/277504-how-profitable-is-boeings-787-dreamliner-not-very With Boeing’s (BA) 787 Dreamliner in the final stages of testing, we thought it would be helpful to clarify the profitability of this program (or perhaps more appropriate, the lack thereof), at least in its early stages. The growth potential of this program has been well-documented, but the 787 platform’s profitability will be nowhere near what management had expected before it experienced the first of many delays of its Dreamliner.  We think investors should be made aware of just how much leeway Boeing has in determining earnings, and why Boeing is one of the more difficult firms for the analyst community to get their arms around due to the lack of transparency. We believe Boeing will set the initial 787 accounting … Read more

Airbus Has Boeing’s Back Against the Wall, Seek Opportunities in Supply Chain

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/276439-airbus-has-boeings-back-against-the-wall-seek-opportunities-in-supply-chain Last week in anticipation of the Paris Air Show–a huge event for the aviation industry–we outlined our forecasts for market share in the narrowbody aircraft segment, which showed Airbus’ A320 gaining a clear lead during the next few decades.  So far during the show, Airbus has received a plethora of orders for its A320neo (new engine option), a re-engining of its popular A320, which competes with Boeing’s 737NG [and within a few years, entrants from around the globe: Comac’s C919 from China, Bombardier’s (BDRBF.PK) CSeries, and the Irkut/UAC MS-21 from Russia]. Orders for the A320neo are coming from around the globe, with Airbus garnering wins from India’s Indigo, Chile’s LAN Airlines (LFL), and domestic carrier Republic (RJET). We’re currently watching for any major shifts within the discount airline … Read more

Word of Caution: Boeing’s Narrowbody Build Rate Is Unsustainable

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/275567-word-of-caution-boeings-narrowbody-build-rate-is-unsustainable  Competition in the narrowbody market continues to heat up, and recent events only support our view that the large commercial jet-making duopoly of Boeing (BA) and Airbus will be shattered in coming years. First, last Wednesday, Boeing released plans to increase production of its 737 workhorse to 42 jets per month by the first half of 2014. We view this strictly as a competitive response to clear its massive narrowbody backlog in the face of firming global competition, not as an indication of incremental demand for Boeing’s soon-to-be-legacy 737NG (it will be replaced with either a re-engined model or a brand new build in coming years). Frequent readers were aware … Read more

Boeing Faces Challenges in the Narrowbody Market

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/273827-boeing-facing-challenges-in-narrowbody-market   Aerospace executives know all too well of the difficulties and complexity of developing brand new planes. Investors have learned that aerospace management is often too optimistic in setting entry-into-service dates. Readers have to look no further than the troubles and serial delays of Boeing’s 787 Dreamliner and Airbus’ A380 to get the gist of what I’m talking about. But have airline customers wised up, too? And, if so, will the perception of pursuing a brand new build to replace its 737 in 2019-2020 actually hurt Boeing and ultimately provide an advantage to Airbus’ A320neo in the 150 to 200 seat category? To the first question: absolutely. Bloomberg reported on Southwest’s (LUV) … Read more

Sorting Through the Aerospace Supply Chain

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/273424-sorting-through-the-aerospace-supply-chain  As outlined in the previous two editions, The Future of the Narrowbody Market and How to Play the Upswing in Commercial Aerospace, expected deliveries of commercial planes are set to advance considerably in coming years. In this third edition, let’s dig into the valuation and potential upside of Precision Castparts (PCP), one of the best long-term plays on commercial aerospace demand. We’ll also dive into an interesting small-cap play and a compelling micro-cap opportunity in the aerospace supply chain. For new readers to this series of articles and analysis, let’s briefly review the trajectory of large commercial aircraft deliveries during the next several years. Aside from the fundamental drivers (replacement planes, … Read more

How to Play the Coming Upswing in Commercial Aerospace

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/272730-how-to-play-the-coming-upswing-in-commercial-aerospace In this, the follow up to our analysis of the narrowbody airplane market, let’s dive into just how robust the delivery upswing will be in commercial aerospace during the next few years and highlight a couple interesting, diversified ways to play the coming boom. We’ll also dive into one of the best aerospace names to own for the long haul, but leave open for Part III of this saga, an in-depth look at this firm’s valuation and the analysis of yet another intriguing play to capitalize on this multi-year cyclical upswing. First, let’s get a feel for what to expect from Boeing (BA) and Airbus during the next five years in terms of … Read more

The Future of the Narrowbody Airplane Market

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/272454-the-future-of-the-narrowbody-airplane-market As many long-time followers of Boeing (BA) understand, the firm’s decision on what to do next with its workhorse 737 (the plane best known for being flown by low-cost leader Southwest) could make or break the company during the latter part of this decade and into next. One of the key things Boeing has been trumpeted for in the past has been its keen foresight in building the revolutionary, mostly-composite, point-to-point aircraft–the 787 Dreamliner–while its main rival Airbus pursued the gargantuan A380 double-decker, the latter betting on the proliferation of the hub-and-spoke model and high-density flights between major airports across the globe. Though there is a market for both the … Read more

Looking Beyond Boeing’s 787 Dreamliner

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This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/270296-looking-beyond-boeings-787-dreamliner Despite Boeing’s well-documented troubles with its revolutionary 787 Dreamliner, the aircraft will likely dominate the small wide-body jetliner segment for many years to come. Investors correctly remain focused on the plane’s first delivery later this year, and subsequent production ramp up to satisfy a massive backlog of unfulfilled orders. And while successful execution on its 787 program would be welcome news, especially as it eases inventory build and bolsters cash flow, looming threats posed to its workhorse 737 in the narrowbody arena— the largest market as measured by units and dollar-value during the next couple decades– should not be ignored. What once was a duopoly in the large commercial aircraft market … Read more