Dreamliner Brings Aerospace And Defense ETFs Into Focus

| About: iShares U.S. (ITA)

Boeing (NYSE:BA) has introduced the 787 Dreamliner, which the company hopes will mark a technological step forward in the way aircrafts are designed and manufactured. As the 787 takes off from Tokyo to Hong Kong later this month, can aerospace and defense sector exchange traded funds get a lift?

All Nippon Airways received the first 787 Dreamliner that will take flight later this month on its first passenger voyage. The plane is expected to fly faster, farther and with better fuel efficiency than precious generations of aircraft, reports W.J. Hennigan for The LA Times.

“This truly is the first new airplane of the 21st Century,” Jim Albaugh, chief executive of Boeing’s commercial airplanes division, said, in an LA Times report.

Planes made from sheets of aluminum could be going the way of the Dreamliner, made from carbon fibers meshed together with epoxy. This design allows better fuel efficiency, mixed with better engines, and more speed due to the lightness compared to aluminum.

The Boeing European competition Airbus is in the works, although the release is set closer to the mid-21st century. New planes are in production, complete with holographic video games, and body-heat activated entertainment.

The Dreamliner is set for transoceanic flights, so U.S. passengers flying domestic will have to wait. United Airlines is rumored to be the first to receive the plane.

“This will set a new bar for passenger experience,” Blake Emery, a psychologist who led the research team for the Dreamliner interior, said. “It marks a turning point for air travel.”

PowerShares Aerospace and Defense (NYSEARCA:PPA) holds Boeing at 5.8% of the portfolio, while iShares Dow Jones Aerospace and Defense (NYSEARCA:ITA) has Boeing as the top holding, at 7.8%. [Budget, Spending Concerns Grounds Ground Aerospace and Defense ETFs]

An exchange traded fund that follows the airline industry is facing significant headwinds as AMR Corp. (AMR) shares lost a third of their value Monday on speculation that the parent of American Airlines is filing for bankruptcy.

iShares Dow Jones Aerospace and Defense ETF

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Tisha Guerrero contributed to this article.

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