EADS rallies against the downwards trend, aircraft lessors suffering

EADS share price continues to bounce between EUR11 and EUR12 per share, up another 1.1% yesterday, on a day that saw most major suppliers lose ground. Boeing’s share price was down 0.7% in trading, following news that the company and Russia’s VSMPO-Avisma will launch their 50:50 titanium manufacturing JV to support B787 production this week. Boeing is also reportedly likely to acquire a Vought Aircraft Industries manufacturing plant, currently considered a bottleneck for B787 production. The facility may reportedly form the basis for a second B787 assembly line.

The worst affected stocks yesterday were aircraft lessors, including AerCap (-5.2%), Aircastle (-4.5%), Babcock & Brown Air (-3.3%) and Genesis Lease (-3.2%), as they continue to display sensitivity to any downturn in general market conditions. US markets were mixed, after returning to business following the 4th of July holiday, while European and Asia stock markets were down by 1-1.5%, as oil prices slumped to just above USD64 per barrel.

Also suffering were online travel agent Expedia (-3.8%) and Indian IT solutions company, NIIT Technologies (-3.8%). Expedia, which is facing a number of US and Canadian class action law-suits for alleged overcharging, has lost USD1.12 per share (about 7.5%) since the start of July, to finish at USD14.43 at the close of trading on Tuesday.

Somewhat more resilient were major engine manufacturers. Rolls-Royce was down 1.0%, after winning a USD470 million engine deal with Turkish Airlines on Friday. MTU Aero Engines was down just 0.3%.

Selected Aviation suppliers’ daily share price movements (% change): 06-Jul-09