Boeing seeing fewer airline order deferrals

AP News
Posted: Dec 08, 2009 5:51 PM

A Boeing Co. executive said Tuesday that fewer customers are deferring jet orders, which may be a sign that things have stopped getting worse for the world's airlines.

Boeing President and Chief Financial Officer James Bell told analysts that customers had deferred orders for 215 aircraft through September, but that few new requests have come in since then.

"The good news is we have not seen a significant number of new deferral requests since the third quarter," he said.

He said Boeing's commercial aircraft division will meet the low end of its delivery projection for 2009.

Boeing hasn't given 2010 financial guidance, but Bell said, "2010 will be another challenging year on both earnings and cash flow."

Also Tuesday, United Airlines said it had signed letters of intent for 50 new planes, split between Boeing's 787 and the new Airbus A350. Bell said Boeing was pleased United bought the 787. As for splitting the order with Airbus, "I guess it's better to get some than none," he said. "Obviously we would have preferred to get all of them."

Boeing has said it expects to fly the new 787 for the first time by the end of this year. Boeing recently tested newly reinforced wings _ basically by bending them. It has not released the results yet, but Bell said the tests went well.

Asked to elaborate, he said, "We didn't have to stop it. The wing didn't break. We were able to complete the test. The engineers that were watching and conducting it felt good about the test itself.

"Now, the proof is in the pudding, so that's why we have to go through and analyze the data, and that's what will tell us if we did good on the test or not. But physically, the test went well."

Bell also said lending for aircraft deliveries is thawing. At the beginning of this year Boeing expected it would need to finance $1 billion worth of deliveries. Now it expects to finance $800 million.

"Clearly the vast majority of our airplane deliveries this year are being financed by other sources, and we would expect that trend to continue," he said.

Boeing is a major U.S. defense contractor, but Bell said it will look to do more defense business outside the U.S. because federal spending may shift away from defense.

Boeing will reposition the defense business "to make sure that we address the budget constraints that the U.S. government is going to face as there's more pressure on doing some of the other things that they're doing like rescuing the finance community and the auto industry, and the pressure that's putting on government spending."

Boeing shares fell 16 cents to close Tuesday at $55.66.

(This version CORRECTS that deferrals were for 215 planes)