Airbus parent EADS still optimistic but shares fall, Boeing & Embraer follow – Share Wrap

Shares in aerospace manufacturers EADS (parent of Airbus), Boeing and Embraer continue to show weakness. EADS officially stated yesterday that Airbus targets "up to 300 new gross orders in 2009, even if it is becoming more challenging in the current market environment" (ie a further downwards revision is possible). The company had an earlier target of 300-400 gross orders for 2009. But head salesman, John Leahy, conceded earlier in the week that the current pace of orders suggested the target would be hard to reach. Mr Leahy told Reuters, "I don't think it will be less than a hundred [gross orders], but if you had to bet today, you would probably bet on fewer than 300".

Investors took Mr Leahy's cue and sent down EADS shares 3.3% yesterday, as it unveiled 1Q09 financial results including a 40% reduction in net profit and a 14% fall in revenue. EADS’ major unit, Airbus, recorded a precipitous 21% fall in revenue in the first three months of the year. EADS also revealed that it has taken a charge of EUR120 million over delays to its A400M military freight project.

Based on a stable aircraft delivery assumption and a US dollar rate of EUR1 = USD1.39, EADS expects its full-year revenues to be "roughly in line with the 2008 level". The outlook (and the assumptions behind it) are clearly of concern to investors.

Boeing’s shares price was down 1.2%, continuing its decline through the week, after recording a three-month high in early-May-2009. 

Embraer’s share price fell 5.1% yesterday. The company recently commented that orders would not return to 2008 levels until 2012, and has been hit particularly hard by the downturn in the business aviation market associated with the global financial crisis.

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Selected aviation suppliers' daily share price movements (% change): 12-May-09