September 2009

EADS (Airbus) & Boeing stocks are cyclical stocks exposed to the global economy that increased by more than 60% in the last six months in anticipation of an upswing in the business cycle.

Cycle investors believe that consumers will start flying again as countries emerge from recession, then airlines will accept delivery of new aircraft and order more.

Airbus is projecting that global air traffic will grow by up to 4% in 2010 and over 6% in 2011.

Boeing believes global air traffic will fall in 2009, grow by 4% in 2010, and grow 6% in 2011

Airlines may be structurally unprofitable, because fuel prices will rise as the economy recovers leading to long-term losses, surplus capacity and fewer aircraft orders.

Five Year Lag: Based on the historical trend from every single previous cycle, aircraft deliveries bottom out around the point where GDP and traffic growth peak. (Evolution Securities).

Aerospace lag: The aerospace "lag" comes from the five-year gap between ordering an aircraft and having it delivered. (Nick Cunningham, an analyst with Evolution Securities)

AviationRegister   E-Xpert Witness Journal

Global developments presenting risks and rewards for the aircraft trading and financing market

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Headline News was last updated: September 17, 2009

Service

Guide.

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U.S. Stock Market Performance

(Performance of the S&P500 one year after the best 26-week gain of at least 30%)

PEAK    One Year Later

April 1963+ 16%

February 1971+   8%

June 1975+   7%

October 1980 - 10%

February 1983 +  5%

March 1986      +26%

April 1991 +  7%

October 1997   +  2%

April 1999 + 12%

The U.S. stock market completed its best six months since 1933 in 2009. The six month gain from  March 9th to September 9th 2009 in the S&P 500 was a growh rate of 53%.

 

Source New York Times/Bloomberg