Boeing (BA) (GE) (UTX) and Middle East Unrest

A report from Bloomberg earlier in the day that 40 percent of estimated orders from Airbus could be wiped out from unrest in the Middle East, misses another big part of the picture, and that is the negative effect it would also have on Boeing (NYSE:BA), and by extension, Boeing suppliers like General Electric (NYSE:GE) and United Technologies (NYSE:UTX).

While it's likely changes in government in Egypt and Tunisia, and possibly in Yemen, Syria, Bahrain, and Libya, could hurt Airbus's short-term performance. Boeing (NYSE:BA) investors specifically (and those in related plays on Boeing suppliers such as General Electric and United Technologies, should also keep in mind that bad news for Airbus isn't necessarily great news for Boeing, since the U.S. aerospace giant is looking for big orders in Arabia as well.

The bottom line is the unrest isn't good news for aircraft producers and their suppliers, although some, like Airbus, could be impacted in the short term more than others.

Boeing was trading at $73.80, gaining $0.33, or 0.45 percent, as of 1:41 PM EDT.

Boeing (BA) Received Illegal U.S. Subsidies Rules WTO

According to a ruling by the World Trade Organization, Boeing (NYSE:BA) received a minimum of $5.3 billion in illegal subsidies from the U.S. and state governments from the period between 1989 and 2006.

Competitor Airbus contends it lost about $45 billion in aircraft sales from the subsidies.

Details of the report, which was released on Thursday but concluded in January, said NASA, the Department of Defense, and the states of Washington, Illinois and Kansas gave Boeing the illegal subsidies.

Included in the subsidies were $2.6 in NASA research and development programs, $2.2 billion in foreign sales corporation export subsidies, and a variety of tax breaks and incentives from a number of states and cities.

The Department of Defense also was ruled as having given Boeing illegal subsidies, but it wasn't clear the amount that was provided, according to the report.

Airbus responded to the ruling, saying it has "publicly condemned the United States for giving Boeing massive illegal subsidies that caused Airbus to lose $45 billion in sales."

Even so, a separate WTO trade panel ruled European governments for illegally supporting Airbus after complaints were filed by the U.S.

Expectations are the ruling will now go to a WTO appeals panel.

Boeing closed Thursday at $73.93, gaining $0.13, or 0.18 percent.

Bombardier (BBD) in Marketing Deal with China's Comac

Bombardier (TSE:BBD) announced today it is partnering with Chinese aircraft maker Commercial Aircraft Corp. of China Ltd., or Comac, to cross-market their new, separate, single-aisle narrow-body jets in emerging and mature markets.

Bombardier, the No. 3 plane maker behind Boeing Co. (NYSE:BA) and Airbus, plans to debut its 100 seat-149 seat CSeries aircraft in 2013, while Comac is aiming to put its larger, 168 seat-190-seat C919 narrow-body into service in 2016.

The move could help the company secure orders in the Chinese market, said Scott Rattee, an analyst at Stonecap Securities Inc. in Toronto.

No definitive agreement with Comac has been signed yet, a Bombardier spokeswoman said.

"It's the first step to subsequent agreements," she said.

Earlier this month, Bombardier signed an $8 billion aircraft-leasing agreement with ICBC Financial Leasing Co. and ICBC's major shareholder, Industrial Commercial Bank of China.

China, the world's most populous country, is reshaping the global aerospace industry's balance of power. China expects air traffic to grow quickly in coming years, with plane makers expecting the country to require thousands of commercial jets in the next two decades. While China has sought to compete with foreign jet makers, as it is doing with the C919, it also continues to buy lots of foreign-made planes.

The country has lined up a heavyweight list of Western partners for its C919, including General Electric Co. (NYSE:G), United Technologies Corp. (NYSE:UTX) and Rockwell Collins Inc. (NYSE:COL). The project is widely seen as a test run for larger and more advanced jets that might attract overseas buyers.




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