Boeing jet deliveries could fall off sharply, analysts say

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Boeing jet deliveries could fall off sharply, analysts say

By Reuters,, 9/15/2001

EATTLE - Deliveries by Boeing Co.'s world-leading commercial jet business will fall sharply in 2002 and 2003 as a result of airline weakness following devastating hijackings this week, two investment banks said yesterday.

DB Alex. Brown analyst Chris Mecray in a research report said Boeing could lose at least 25 percent of its expected 2002 deliveries, slashing the total to 390 or lower from Boeing's official forecast of 515.

In 2003, deliveries could fall to 300 or lower, Mecray said, well below his prior forecast of 470.

In a separate report, Merrill Lynch analyst Byron Callan cut his 2002 forecast for Boeing jet deliveries to 456 and his 2003 forecast to 356.

Boeing plans to deliver 538 jetliners in 2001 and has previously said it would deliver 510 to 520 in 2002. The Chicago-based aerospace giant was expected to release its 2003 forecast during its third-quarter earnings report in October.

World airlines had already been suffering through their worst year in a decade, with US carriers on course to lose billions of dollars this year.

With the loss of four hijacked Boeing jets Tuesday - in terror attacks on the World Trade Center in New York and the Pentagon near Washington, D.C., and in a separate crash in western Pennsylvania - airline woes will mount, Mecray said.

''Aircraft orders could remain at nil for coming quarters,'' Mecray wrote. ''As a result, we don't see Boeing achieving anything close to the 400 units [orders] predicted for 2001, and possibly seeing negligible orders next year.''

Boeing issued a statement saying it was too early to assess the damage to its business, noting that the last major airline downturn, brought on by the Gulf War a decade ago, proved temporary.

''While [such events] have had a significant impact over the span of several years, they have not dramatically affected the long-term trends in the world economy, and therefore our market outlook. Obviously it remains to be seen whether the events of Sept. 11 will cause a departure from this pattern,'' Boeing said.

Merrill also cut its earnings forecasts for Boeing to $3.85 per share in 2002, down from $4.55, and $4.00 per share in 2003, down from $5.00.

Callan called Boeing's military business ''healthy,'' buoyed by its prime contract to build the C-17 transport aircraft and projects including air-launched cruise missiles, military intelligence systems, and ballistic missile defense.

Callan lowered his 12-to-18-month price objective to $57 from the low $70s.

Monday, the last day of New York Stock Exchange trading before the hijackings shuttered most US markets, Boeing shares closed at $43.50, down 37 percent from a May 17 peak of $68.75.

Thursday, an official at Britain's BAE Systems PLC , which owns 20 percent of rival jetmaker Airbus SAS, said airline order deferrals could trim its delivery targets in 2003. BAE still expected 350 to 370 deliveries in 2002, up from 330 in 2001.

Shares of BAE have risen 12 percent since Monday. Shares of European Aeronautic Defence and Space Co., which owns the other 80 percent of Airbus, have fallen 27 percent.

This story ran on page 7 of the Boston Globe on 9/15/2001. © Copyright 2001 Globe Newspaper Company.

http://www.boston.com/dailyglobe2/258/business/Boeing_jet_deliveries_could_fall_off_sharply_analysts_say%2b.shtml

-- Martin Thompson (mthom1927@aol.com), September 15, 2001


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