Anticipated Orders From US Airlines May Not Materialize

Anyone casting even the most casual eye towards commercial airliner sales totals over the past three years has no doubt been amazed at the record order tallies coming in. In 2007 alone, Boeing and Airbus combined for over 2,700 sales... thanks largely to massive orders from emerging markets in Asia, and the Middle East.

No one expected those heady times to continue, but there are indications the dropoff might be harsher than expected. Reuters reports Boeing's order book, in particular, may be hit hard by current economic conditions, and shaky outlooks for US carriers.

That's because many of those airlines were expected to place orders to replace their aging fleets in coming years. American Airlines had planned to replace its nearly 300 aging MD-80s, presumably with new Boeing 737s; Delta was expected to order a number of jets as well -- including the upcoming 787 Dreamliner -- to replace its older medium- and- long-haul aircraft.

Now, though, those older planes will be grounded, not replaced... as airlines slash capacity, hoping fewer available seats will translate into higher air fares. Other airlines, including AirTran, have deferred deliveries over the next several years for the same reason.

"The airlines are having a hell of a rough time, which means they will continue being weak financially," said aviation consultant Paul Nisbet with JSA Research. "The US airlines in particular are going to have to delay further buying airplanes."

Boeing's stock is feeling the pinch, as well. After months of impressive returns, shares in the planemaker fell each of the past five days. Compared to its all-time high in July 2007, Boeing's stock price has fallen 28 percent.

Macquarie Capital's Rob Stallard says the slump could mark "the end of this aerospace up-cycle.

"Although the Boeing backlog is currently huge, we expect declining orders and delivery deferrals to result in a flattening off in production from 2010," the stock analyst added.

FMI: www.boeing.com