Airbus, Boeing and aircraft funding by government. LVMH rises 7.0%

Signs begin to emerge that a trans-Atlantic aircraft financing credit battle could be starting. EADS shares rose 4.2% yesterday on rumours of a planned EUR5 billion government support package to assist in funding sales of Airbus aircraft. Boeing shares meanwhile rose 2.5% on the day.

Aircraft values are rapidly falling from the peaks of last year, as airlines seek deferrals and cancel aircraft, but an important influence on pricing will be the ability for airlines to secure funding when they do wish to buy.

In the past, any hint of government subsidy for manufacturers on either side of the Atlantic has been met with stern challenges from the other side. But on this occasion the mutual interest in ensuring that airlines can fund their purchases may well result in a quiet understanding between the respective interests.

Selected Aviation suppliers daily share price movements (% change): 26-Jan-09

LVMH, the world's biggest luxury goods group, with a big presence on- airport, showed strength as it moved to counter recent concerns that the luxury end of the market is under threat.