Friday the 13th is indeed an unlucky day for New Jersey-based Honeywell(NYSE: HON) and its shareholders. The Dow component's been whacked by about 15% so far today. The trouble behind this beat-down? The earnings warning it issued yesterday after the market's close.

The company warned that third-quarter and full-year 2002 earnings will be below expectations. This is the second time it has warned about its 2002 earnings. Back in July, it lowered guidance and cited weakened demand for its airplane parts, thanks to the general malaise afflicting the travel and airline industry.

That frailness is still troubling Honeywell, which is not particularly surprising. Until the commercial airline industry starts rebounding, it will likely find itself struggling to sell its aftermarket aerospace parts. Other divisions of the company are being affected by the economy's weakness, too. It now expects earnings per share for the third quarter to come in between $0.50-$0.52. For the year, it projects $2.00-$2.05. Analysts were looking for $0.60 for the third quarter and $2.27 for 2002.

Here's an interesting thing about yesterday's announcement: While the company is reducing earnings guidance, it is keeping its free cash flow projections both for the year and the third quarter squarely in place, which is encouraging. Its 2002 free cash flow should come in at $1.8 billion, which is about $400 million more than 2001. For the third quarter, it will be somewhere around $500 million, compared to the $353 million it generated in 2001's third quarter.

While it is certainly having a difficult time at the moment, all hope's not lost for Honeywell. It is tightening its belt, cutting costs, and still generating cash. Once the commercial airline industry begins turning around, and the economy starts righting itself, the company should benefit. Until then, it is plugging along, keeping lean, and adding to its free cash flow.