BE Aerospace CEO Sees Weak 787 Delivery Outlook For 2011

A leading supplier on the delayed Boeing Co. (BA) 787 aircraft program said Wednesday that the outlook for deliveries next year "does not look particularly strong."

Suppliers have privately expressed doubts that Boeing will deliver few if any operational 787s next year in the wake of an onboard fire on a plane last month that grounded the test fleet. Boeing has said it will outline the impact on the delivery schedule in a few weeks. The first delivery is officially set to arrive in February.

"The outlook for 787 deliveries in 2011 does not look particularly strong," said Amin Khoury, chairman and chief executive of BE Aerospace Inc. (BEAV), the world's largest supplier of aircraft interiors.

Khoury, speaking at an investor conference, said that less than 5% of its 2011 profit guidance hinged on the 787 schedule, a margin he described as "just noise."

The U.S. company sees per-share earnings of $1.90 to $1.95 next year on a 20% rise in revenue to $2.4 billion.

Khoury said a key growth area for BE Aerospace has been power- and thermal- management systems. Commercial aircraft became "more electric," moving away from hydraulics to move plane controls and incorporating more sophisticated passenger amenities.

"There is a secular effect that's going on, with more and more power packed into smaller spaces," he said.

BE Aerospace has been expanding through acquisitions in the power-management space; however, it didn't produce the P100 electrical panel, traced as the source of the Nov. 9 fire on the 787 test plane. That was made by France's Zodiac Aerospace (ZODFY, ZC.FR).

Suppliers and 787 customers are in negotiations with Boeing over the delays to the 787 program, whose first delivery is already running three years behind schedule. Suppliers are seeking compensation for inventory and parts built up in anticipation of rising production of the plane.

BE Aerospace shares were recently up 2.1% at $36.25. Boeing shares rose 1.5% to $64.71.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com

B/E Aerospace, Inc. (NASDAQ:BEAV)
Historical Stock Chart
From May 2024 to Jun 2024