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A320neo to compel Boeing to reveal narrowbody plans by mid-year: Morgan Stanley

Analysis

Morgan Stanley analyst Heidi Wood stated she believes Airbus' A320neo aircraft will compel Boeing to reveal plans for a new narrowbody by June. According to the analyst: "Airbus could announce between 500-1,000 new [A320neo] orders by the Paris Air Show [in Jun-2011], which adds pressure for [Boeing] to come up with a new 737 replacement."

Summary
  • Analyst predicts Airbus' A320neo orders will pressure Boeing to reveal plans for a new narrowbody aircraft by June.
  • Boeing aims to finalize plans for a new narrowbody by the end of 2011, with entry into service expected in 2019 or 2020.
  • Boeing CEO sees no compelling case for re-engining existing aircraft models.
  • Boeing's shares experience a small gain following the release of its 4Q2010 and full-year earnings report.
  • JP Morgan maintains an "overweight" rating and USD83 price target on Boeing stock.
  • Airbus parent company EADS sees a 4% surge in its shares.

"We believe [Boeing] could announce a new narrowbody by Paris Air show," Ms Wood said adding re-engining "makes less sense, in our view".

Boeing stated it aims to finalise its plans for a new narrowbody by the end of 2011 with entry into service slated for 2019 or 2020. Chairman, President and CEO, Jim McNerney, stated he did not see a compelling case for re-engining.

Boeing's shares managed a small gain on Thursday in the aftermath of its 4Q2010 and full-year earnings report the day prior, with analyst commentary focusing on B787 and B747-8 programme outlooks and the US manufacturer's narrowbody plans.

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JP Morgan maintained its "overweight" rating and USD83 price target on the stock, while Citigroup lowered its price target for Boeing from USD85 to USD84, but maintained its "buy" rating.

Shares in rival Airbus parent EADS surged 4% yesterday.

Selected original equipment manufacturers' share price movements: (% change): 27-Jan-2011

OEMs

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