Quiet day for aviation suppliers - Stock Wrap

UK procurement and inventory management service provider, Aero Inventory, was up 4.8%, finishing a strong week of trading which saw its share price up from 200 pence to 238 pence, a rise of approximately 19%.

The company had traded between 170 and 200 pence since mid-Apr, after reporting very strong results in March, including a 55% increase in revenue and a 46% increase in net profit, although its interim dividend remained steady. In Feb-2009, the company placed 4.8 million new shares (approximately 9.1% of total issued share capital) with existing shareholders at 250 pence per share.

Chinese aviation IT services provider, Travel Sky Technology, was up 3.2% in trading.

Engine manufacturer share movements were subdued, with Rolls Royce trading down 1.2%, despite announcing a USD470 million order from Turkish Airlines for engines to power A330 aircraft. MTU Aero Engines was basically flat (down just 0.04%), with the stock trading around EUR26 per share through most of last week.

EADS was down just 0.3% on Friday, as more news unfolds about European state support for its A350 XWB programme, run by Airbus. The UK Government is reportedly willing to add EUR500 million to the programme, to go with EUR1.4 billion from France, EUR1.1 billion from Germany and EUR300 million from Spain. However, it reportedly favours a loan rather than a reimbursable advance, as it is financially less risky.

A decision on the financing arrangements is reportedly due in mid-July. The A350 programme is expected to require EUR11-15 billion in investment to cover development and production.

The financing decision will be much watched on the other side of the Atlantic. The World Trade Organisation is expected to issue a preliminary decision this month on a 2004 complaint by the US that European subsidies to Airbus (for the A380 programme) breach WTO regulations. For its part, the EU has its own case against the US, for alleged subsidies provided to Boeing.

Selected Aviation suppliers’ daily share price movements (% change): 03-Jul-09