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Saturday, November 04, 2006

Weekend Edition: Boeing In Molasses (BA)

Investors might assume that when a company’s chief competitor folds its tent, the market share in the industry would move from the vanquished to the victor. Not so with Boeing. At least not yet.

Boeing has not received any major orders for its new jumbo plane, the 747-8, despite a slew of problems with the Airbus 380, its new super-jumbo product.

A number of Airbus customers, lead by Emirate Airlines, has expressed severe doubts about whether they will stick with the Airbus 380, but where are the orders for the competing Boeing product?

Boeing is faced with some measure of doubt about whether it can take advantage of this situation, or, if Airbus can hold customers, even with a late delivery schedule.

Oddly enough, Boeing is beginning to beat Airbus in the market. for slightly smaller intercontinental aircraft. It has broken a key account in South America, TAM of Brazil, by selling it the new 777. Previously, the airline bought from Airbus. The 777 and new Boeing Dreamliner have had significant worldwide success in this market segment.

But, the orders in the super-jumbo category are not coming to Boeing. It may be one reason that shares in the US aircraft manufacturer sit at under $80, down from a 52-week high of nearly $90.

Big plane order, big stock price?

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.
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