Boeing shares fall as analyst cuts 787 estimates

Shares of Boeing Co. and several other aerospace companies fell Thursday as an analyst cut his estimates of 787 jetliner deliveries, though he said the delay will allow Boeing to make improvements.

Analyst Howard A. Rubel of Jefferies & Co. Inc. cut his estimated delivery of the 787 to 18 from 24 in 2010 and delaying his delivery forecast by three months.

Boeing announced June 23 it needs to reinforce small areas near the connection of the wings and fuselage before conducting the first test flight, which it had insisted would occur before July. A revised schedule for the flight, and first deliveries to customers, will not be announced for a few weeks.

The announcement came as Boeing, the world's second-largest commercial airplane maker, and European archrival Airbus SA grapple with slumping orders for jets as the recession dampens demand for air travel and cargo services. Tight credit markets also have muted orders for new planes.

Rubel said it is unclear as to how long it will take the Chicago-based Boeing to fix the problem in the 787, but he believes it is an engineering problem rather than a "basic science problem or bad internal communication regarding risk.

"From what we can determine, the systems elements of the program are performing well and that this current delay will enable the company to improve upon items that were in need of upgrading," he said in a note to investors.

In addition to reducing the 787 delivery rate for 2010, Rubel said he "added back" a few A320's for 2009 and several A330's for 2010. The delay in the 787 has allowed Airbus to sell additional A330's.

"Boeing continues to have the balancing act of holding onto a production line, but avoiding carrying too much inventory as it completes the development of the 787," he said.

Shares of Boeing fell $1.26, or 3 percent, to $40.98 in midday trading. United Technologies Corp., which contributes avionics and electronics to the 787 in its Hamilton Sundstrand unit, fell $1.50, or 2.9 percent, to $50.76 and Honeywell International Inc. slipped $1.22, or 3.8 percent, to $30.64. General Dynamics Corp. declined $1.60, or 2.9 percent, to $54.08.