For Airplane Makers, The Sky Is Falling

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Includes: AIG, BA, COL, ERJ, ESL, HXL, LDSH
by: Zacks Investment Research

The aviation financiers gathered together in Phoenix this week to commiserate -- with each other as well as the commercial aircraft manufacturers. Their message: "You can build 'em, but you can’t get financing for 'em!" Uh oh!

One attendee opined that we who live in the Pacific Northwest are about to see whitetails (vernacular for undeliverable aircraft) at Boeing’s (NYSE:BA) finishing plant in Seattle (as are the French at the Airbus plant in Toulouse). The ultimate consequence of this shortfall in funding is that Airbus and Boeing -- plus Bombardier and Embraer (NYSE:ERJ) -- are about to encounter the same thing that has happened to the executive aircraft manufacturers (not to mention the automobile makers, et al): Too many pieces of equipment and too few buyers with money. Darn!

Of course, the affected stocks have forewarned us of this impending disaster. While the S&P 500 is down 41.5% over the last 52 weeks, Boeing is off by 55.0%, B/E Aerospace (BEAV) is down 78.2%, Esterline Technologies (NYSE:ESL) is down 59.5%, Hexcel (NYSE:HXL) is down 68.8%, Ladish (NASDAQ:LDSH) down 78.8%... and the list goes on.

Perhaps -- just perhaps -- ILFC (the World’s largest aircraft leasing company which, in turn, is owned by AIG) can convince its parent to furnish it with enough (government) funds so that it can "keep ‘em flying!" Otherwise, will the last person out of Seattle, Renton and Everett please turn off the lights?

Let us continue praying!