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EADS rises on surprise order for Airbus, will the Boeing 787 fly earlier than expected?

4-Dec-2009

Airbus’ orders and deliveries update for Nov-2009 contained a surprise: an order for 52 A320s from an “unidentified customer”. The order pushes the manufacturer’s gross orders to 225 for the year (and 194 net), and helped the share price of parent, EADS, rise 2.4% in trading on Thursday.

The manufacturer booked a total of 74 orders for the month, the strongest month of ordering this year. Airbus has maintained its target of approximately 300 gross orders for the year, suggesting it expects to book another 75 or so orders in Dec-2009.

Airbus orders and deliveries: Jan-2009 to Nov-2009

Airbus delivered 38 aircraft in Nov-2009, consisting of 30 A320 family aircraft, seven A330s and a single A340-500. The manufacturer has delivered 437 aircraft this year (including seven A380s) and needs another 46 deliveries in Dec-2009 to match last year’s production.

787 to fly on 14 December?

Meanwhile, Boeing could reportedly conduct the first test flight of its delayed B787 by mid-Dec-2009, slightly earlier than initial reports. The manufacturer recently completed the static test necessary to validate the side-of-body modification made to the B787, clearing the aircraft for its planned first flight. Boeing’s shares were flat on Thursday.

Bombardier profit down, weak forecast for aerospace market.

Bombardier Group reported net revenue USD4.6 billion in 3Q2009, up 1% year-on-year, while net profit was USD168 million, compared to USD226 million last fiscal year.

Bombardier’s aerospace division reported a 10% decline in revenue in 3Q2009, contracting to USD2.1 billion. The decline in revenue reflects lower deliveries and selling prices for business aircraft. This has been partially offset by higher revenues for commercial aircraft, mainly due to increased deliveries.

Commercial orders were down in 3Q2009, “reflecting the significantly reduced demand for commercial aircraft, consistent with the current worldwide economic environment”. American Eagle Airlines did convert 22 CRJ options to firm orders at the end of the quarter, but Bombardier intends to reduce CRJ production in 2010. The business aircraft market is “experiencing difficulties”, but there are “some signs of stabilisation”.

Bombardier delivered 61 aircraft in 3Q20, consisting of 33 business aircraft, 27 commercial, and one amphibious aircraft. In the same period last year, the manufacturer delivered 80 aircraft (57 business, 22 commercial and one amphibious aircraft).

Bombardier’s firm order backlog slipped to USD18.1 billion as at 31-Oct-2009, compared to USD23.5 billion as at 31-Jan-2009. The decline in the backlog is due to business aircraft order cancellations, as well as lower overall levels of new orders in business aircraft and regional jets. Orders for the manufacturer’s new CSeries family in 1Q2009 has only partially offset the lower ordering in other segments.

Aerospace EBIT in 3Q2009 was USD103 million, a margin of approximately 5%. This compares to the USD176 million EBIT in 3Q2008, a margin of 7.7%. EBIT was affected by a lower prices for business aircraft and higher cost of sales per unit.

The outlook for 2010 is not strong. The Conference Board of Canada recently forecast a reduction in prices, production and profits for the Canadian aerospace industry in 2010, dragged down by slowing business jet ordering. Pre-tax profit is expected to decline nearly 20% year-on-year in 2010, and further production cuts are “likely” if the trend of deferred and cancelled orders continues.

Bombardier traded down 2.1% on the lower profit result. Main rival, Embraer, lost 1.0% yesterday.

Selected Aviation suppliers’ daily share price movements (% change): 03-Dec-09


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