Aercap and Aircastle surge, while Boeing drops on 787 woes – Share Wrap

Aircraft lessors continue to trade upwards, led by Aircastle (+8.1%) and Aercap (+9.9%), after signing a new lease agreement with Virgin Atlantic on Tuesday. Aircraft suppliers shares were generally stronger, as most markets in Europe, North America and Asia posted gains, and oil prices eased below USD69 per barrel.

Boeing’s decision to again delay the B787 has affected investor confidence in the US manufacturer. After a drop of 6.5% on Tuesday, Boeing’s share price fell a further 5.8% yesterday. A new test flight date and delivery timetable will be announced in a few weeks, although some analysts are already predicting that initial B787 deliveries (to All Nippon Airways) could be delayed from 1Q2010 to 2011.

EADS, parent of Airbus, has also continued its strong trading, up 4.2% yesterday. The company has been bolstered by better than expected ordering at last week’s Paris Air Show (winning 58 firm orders and 69 commitments), but the troubled A400M programme and continued delays to A380 production are both long-term concerns.

Engine suppliers were also up, with Rolls-Royce gaining 3.3% and MTU Aero Engines up 4.2%. Both companies’ order backlogs were bolstered by strong ordering at the Paris Air Show, with both confident of their ability to ride out the current recession and increase production when conditions ease. Meanwhile, Pratt & Whitney has announced a plan to retrench 200 of its 37,000 strong workforce, under plans by parent, United Technologies, to slim its workforce by 11,600 (approximately 5%).

Selected Aviation suppliers’ daily share price movements (% change): 24-Jun-09