Continental CNX 787-9 order ?

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I'm not sure, but that is what the armchair analysts @ the Motleyfool are thinking:

What a difference a recession makes.


Eight months ago, Boeing's (NYSE: BA) biggest bogeyman was its fear that a machinists' union strike would delay production of the firm's 3,400-plane backlog of work to be done. Its second biggest worry was that such delays would invoke penalties for late delivery of the planes. Customers like Continental (NYSE: CAL),Delta (NYSE: DAL), and AIG's (NYSE: AIG) International Lease Finance subsidiary were queuing up and clamoring for their planes, and Boeing was already hip-deep in problems producing them.

Only two problems? We should be so lucky
On Friday, a third and more serious concern became actual, as Boeing revealed that instead of making it pay up, customers are backing out (of their contracts). An "unidentified" customer canceled a $4.44 billion contract to purchase 25 Boeing 787s, which when combined with other cancellations announced earlier means that Boeing has now lost more sales than it's inked so far this year -- 59 cancellations versus 58 new orders.
Who pushed Boeing over the brink? Well, Delta was said to be considering nixing a flight of 18 787-8s that it had on order. Last I heard, AMR's (NYSE: AMR) American Airlines was still debating its optional purchase rights on 58 additional 787s—but if cancelled, those wouldn't be firm orders.
My best guess is that Continental's the culprit. We know the company had a 25-plane detachment that included at least 17 of the 787-9 variant on order. A little calculator work tells us that the 787s that got canceled last week were of this very variety. (The per-plane sales price, after presumed discounts, comes to just under $180 million apiece – just a bit south of the 787-9 sales prices according to Boeing's price list.) Put two and two together, and I think it equals: Continental.

What's it mean to investors?
Depends on who you invested in. If Continental, then last week's news suggests business is bad. The first 787-9 isn't even expected to enter service until 2013. Whoever's canceling 787-9s today -- whether Continental or someone else -- thinks the airline business is pretty rough. (In which case, someone should inform Priceline.com (Nasdaq: PCLN). With first-quarter profits up 89%, they apparently didn't get the memo.)
But if you own Boeing, I see two implications. You know the firm's "$350 billion backlog"? It seems that number is -- ahem -- up in the air. But by the same 2token, don't lose faith entirely. Backlog is never set entirely in stone, and orders that vanish into thin air today can return out of the blue if and when the economy turns back up.
 

Cpt Oveur

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Aircraft 19 and 20 were the first two "penalty planes." They inked for them in the summer of 05 because the 787 was going to be late. All the rest of the 777 orders were at severly discounted prices as well. CAL is severely low on widebodies, and I wouldn't doubt they scrub the order for more 777s if it meant getting them on property sooner.
 

Yuppyguppy

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I think they are going to get 52 777's and at least 30 747-400's soon :)
 

SFR

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No, we are still hung. For all you CAL haters, better luck next time.....


Stoned me just like jelly roll and it stoned me!!!!!!
 

whatitdoing?

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Not cancelled. I believe it was China Eastern.
 

DontFeedTheBear

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http://www.atwonline.com/news/story.html?storyID=16576

Airbus: RBS was customer for canceled Dreamliner order


Tuesday May 12, 2009


The Royal Bank of Scotland's RBS Aviation Capital subsidiary is the customer that canceled its order for 25 787s, Airbus Executive VP-Programs Tom Williams confirmed to ATWOnline in Hamburg.

Boeing revealed the cancellation on its Orders and Deliveries website for the week ended May 5 (ATWOnline, May 8). RBS was hit hard by the financial crisis and the UK government has taken a majority stake as part of its bailout effort.

Williams said the 787 cancellation was not a reflection of either the bank's or the market's confidence in the delayed aircraft program but rather an attempt by RBS to "limit their exposure" to noncore investments. According to its website, RBS Aviation Capital owns/manages or has orders for 372 aircraft and has 100 airline customers in 38 countries. Williams said Airbus would not move to secure RBS as an A350 customer.

Boeing has had orders for 57 787s canceled so far and its order book for the year to date now stands at -49 including the eight firmed up by Gulf Air.

by Brian Straus


 
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