Paris Blues: Wall Street Knocks Boeing as Air Show Winds Down - TheStreet

Paris Blues: Wall Street Knocks Boeing as Air Show Winds Down

Rival Airbus crows about orders at the conference on its home turf. Boeing's stock slides lower.
Author:
Publish date:

In response to what many considered a ho-hum showing at the annual industry trade show held this week in Paris,

Boeing

(BA) - Get Report

had a rough time in the markets -- falling 11% this week through Thursday and another 1.3% in trading Friday.

The Chicago (nee Seattle)-based jet and aerospace maker surprised participants at the show by saying it wouldn't be announcing a raft of new plane orders as it has in the past, explaining that it had decided to announce orders weekly instead. Some observers cast a negative spin on the change. An analyst at

Banc of America Securities

downgraded the stock based partly on the low number of new orders Boeing announced.

Airbus

, established as a consortium under French law, took the occasion to point to the scoreboard. "We're guessing the reason

they declined to announce new orders is because they don't have many orders to announce," says Airbus spokesperson Mary Anne Greczyn. Earlier this week, a top Airbus executive predicted Boeing's deliveries would fall by some 20% over the next few years, as Airbus eats into the company's market share.

A Boeing spokesman characterized the Airbus official's prediction as "entirely inappropriate"; the company declined to speculate on future deliveries. Banc of America analyst Nick Fothergill, however, has predicted deliveries could fall by 15% next year.

First Union Securities

also issued a downgrade based on concerns about a broad cyclical downturn for aircraft manufacturers.

Meanwhile, Airbus appeared to be riding a wave of momentum at the air show, announcing it already had notched 67 orders for its bold new superjumbo jet, the A380.

The intense rivalry between the two companies ramped up in the past few years as Airbus fleshed out the details of its plan for the massive jet. Boeing discarded plans for a competing plane this April, proposing instead to build a plane dubbed the sonic cruiser. The plane will be designed to fly as much as 20% faster, at speeds of Mach 0.98, and for longer stretches than conventional planes.

The two strategies reflect profoundly different ideas about how to best serve airline passengers, with air traffic expected to nearly triple during the next 20 years. But in light of Boeing's innovative past, some analysts were disappointed by its decision not to compete in the superjumbo market.

"It basically conceded that market to Airbus," says Robert Friedman, an equity analyst at

Standard & Poor's

. "Airbus is eating Boeing's lunch in the jumbo market, and that has traditionally been the highest-profit segment" of the commercial aircraft business.

Because Boeing hasn't taken any orders yet, it's difficult to suss out the prospects for the sonic cruiser. In the first-quarter conference call, Boeing Chief Executive Phil Condit said only that airlines had expressed "considerable interest" in the plane.

At the end of trading Friday, Boeing was off 75 cents to an even $57.