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Thursday, September 21, 2006

The Road To Dubai: Will Boeing Go Calling? (BA)

Late word is that United Arab Emirates are fed up with delays on the Airbus 380 super-jumbo jet. That's the plan that can carry 555 people, probably more than the population of the small Middle Eastern country.

But, the media reports that the deal is still worth $13.5 billion, at least at the list price of the planes. They may have gotten a discount.

A Boeing salesman is flying to Dubai now, or he is there already. The delay could spell a very big deal of Boeing. United Arab Emirates can buy 747s now. The newest version of the Boeing jet fits 450 people.

Airbus has become Boeing's best friend, as hard as that may be to believe.

And, Boeing needs a friend. Delays and accusations of illegal activities by Boeing and the US Air Force has forced Boeing to take $950 million in write-downs. And, one of its top exectutives decide to move to Detroit to run Ford. He may be back, but it could take a few months.

Boeing has two pieces of potentially good news sitting just off stage. It would appear that the big airframe company won the $2.1 billion deal to provide structures for patrolling the US borders. Much of this money will go to sub-contractors, but it is still a big win. And, United Arab Emirates and other large carriers who counted on the A-380 have to be looking at the new 747. Many cannot wait an extra year or two to get larger planes into service without keeping their seating capacity below its ideal levels.

Boeing's run-in with the government and delays of some of its own products have hurt the company. After hitting almost $90 in mid-May, the stock dropped to $72 last month. It now trades at $77.

The border contract is helpful to Boeing shareholders, but picking up some of the strained Airbus 380 business would be priceless.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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