investingfromtheright

I am retired and take educated guesses on all things financial.

May 25, 2007

May 26, 2007: Aero defense and two airlines clean up in the Democrats' war funding bill





The pictures are not all that relevent, but why not do weekend chuckles in addition to news.





A few bits from aero defense:

The Iraq Emergency Supplemental totalled $120b, including $3b for the WRAP program.

The Navy awarded 5-year ID/IQ contracts for upwards of $600m to HON, LMT, NOC and RTN for anti-terror force protection.

GD/Gulfstream won an order for 20 G450s worth more than $700m from Saudi Arabia.

GSA is scheduled to award 25-30 prime contracts for the $50b ID/IQ Alliant contract in June - stay tuned.

The Boeing 787 is poised to be right on schedule. BA is expected to hike earnings guidance significantly in late July.

Air France announced an order for 18 Boring 777s and 2 Airbus A380s.

SPR secondary offering is priced at $33.50 share.

TDG secondary offering is priced at $36.25 share.

COL received awards from Cessna, Gulfstream, Lynx Aviation and Nav Canada for cabin mgmt. and heads-up guidance systems. I like Rockwell Collins (COL) very much at this time.

Stock picks in this sector are the same as my last aero defense post...except, Rockwell Collins is really doing a superb job winning contracts and seems poised for continued growth in sales and on the bottom line.

OINK OINK: American Airlines (AMR) and Continental Air (CAL) received gifts from God .

The Iraq bill included a pension funding break for both carriers. AMR and CAL were successful in getting some "technical corrections" to last year's pension bill so that they will now be able to use a higher discount rate of 8.25% to calculate their pension funding liability rather than the 6% used currently. In last year's bill, Northwest and Delta were allowed to use a discount rate of 8.85% to calculate their own funding liability. AMR and CAL's lobbying efforts with far left Senators Sherrod Brown from Ohio and Ed Rendell from Pennsylvania paid off, it is said.

These airlines will benefit from increased financial flexibility - or to build cash to form a consolidation war chest.

Separately, the US and China have agreed to increase daily flights by US carriers into China by thirteen by 2012 to total twenty three. No big deal here. Only three US airlines will participate, probably American, Continental and United. Air China, China Southern and China Eastern will also accelerate their rt flights into North America. Swire Pacific is a peripheral beneficiary (SWRAY) as well as Singapore Airlines with their stake in China Eastern.

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