Plane suppliers shrug off Boeing 787 delay
Atlanta, August 28, 2010
Shares of many aircraft suppliers gained on Friday in concert with the broader market, shrugging off news of another delay in Boeing's Dreamliner 787 programme.
The world's No. 2 plane maker behind Airbus said delivery of its first 787 was now expected in mid-first-quarter 2011.
Boeing had said this summer that the delivery might slip into early 2011 from the fourth quarter of 2010.
Spirit AeroSystems Holdings, which provides the nose for the aircraft, said it has been told to adhere to its current production schedule.
'What Boeing has told us is that it's crucial for us to keep working to the current production schedules, so there's really no change for us,' Spirit AeroSystems spokesman Ken Evans said on Friday. 'We remain a firm believer in the airplane.'
While the delay may have been unwelcome news for parts makers, analysts said there would likely not be any significant near-term material financial impact.
Rockwell Collins Inc spokeswoman Pam Tvrdy said the delay would have 'minimal' impact on production and 'no financial impact' for the supplier of cockpit systems.
'It impacts Boeing from the aspect of their reputation because this is the sixth time they have made this delay,' said Paul Nisbet of JSA Research. 'And it's embarrassing to say the least.
Alex Hamilton, managing director at boutique investment firm EarlyBirdCapital, said the delivery delay further pushes back the payoff that suppliers will see once production of the carbon-composite 787 fully ramps up.
Still, he added that rising production rates for other plane models and improved air traffic trends generally bode well for parts makers.
'Despite 787, most of these suppliers are going to do well because we're in the early stages of a recovery,' Hamilton said.
The widebody, fuel-efficient 787 aircraft, already more than two years behind its original schedule, has been plagued by repeated production delays and a 2008 machinists strike.
Among big U.S. airlines with orders for the 787, Continental Airlines Inc called the delay a disappointment but said it was still committed to the program and hasn't gotten a revision to its delivery schedule.
Continental, which plans to merge with United parent UAL Corp and become the world's largest carrier, has 25 Dreamliner planes on order it expects in the second half of next year. UAL also has orders for 25 Dreamliners.
Boeing shares were up 2.6 per cent, Continental shares rose 1.9 per cent and UAL added 2.1 per cent.
Among supplier shares, Spirit AeroSystems gained 3.5 per cent to $19.68 in early afternoon trading on Friday as global stocks rose. Wheel and brake maker Goodrich Corp was up .8 per cent to $70.23, Rockwell Collins rose 2.5 per cent and Triumph Group, which supplies composite ducts and fittings to the Dreamliner, was up 2.1 per cent. – Reuters