EADS down on tanker news, lessors trading strongly – Suppliers share wrap

Shares in EADS lost EUR0.36 in trading on Tuesday (down 2.3%) after reports surfaced that 47 members of the US House of Representatives have petitioned the Obama Administration to consider throwing out the joint Northrup Grumman/EADS bid for aerial refueling tankers, as they are based on “Airbus' illegally subsidised aircraft”.

The USD35 billion tanker contract was originally won by the Northrup Grumman/EADS entry, but was subsequently challenged by Boeing, forcing the US Department of Defence to conduct another competitive tender. Boeing's shares gained 2.2% yesterday.

Genesis Lease traded up 7.1% yesterday, after being pushed 12% higher on Monday, due to speculation that the company will be acquired by Dutch lessor, AerCap. Genesis Lease confirmed on Monday that it is in M&A negotiations with an unnamed party, but would not comment further. AerCap traded down 3.2% on Tuesday, after losing 0.2% on Monday.

Other leasing companies reacted well to the news, with Babcock & Brown Air up 7.1%, its strongest gain for more than four weeks. Aircastle also traded up strongly, gaining 4.6%. The underlying strength of the leasing market has seen leasing companies trading well over the past six months. Most have positive revenue and profit outlooks for the full year.

Selected Aviation suppliers’ daily share price movements (% change): 15-Sep-09