April 9, 2009, Washington -- US aerospace giant Boeing would be hit harder than other defense contractors if the Pentagon's proposed cuts to major weapons programs are approved, analysts said Tuesday.
Boeing's stock fell 2.65 percent to 37.15 dollars in trading a day after Defense Secretary Robert Gates presented a "reform budget" that calls for deep cuts in some big projects led by the company.
Gates' recommendations call for ending production of F-22 fighter jets, scaling back the Army's Future Combat Systems (FCS) program of hi-tech vehicles and robots, canceling plans for more C-17 transport planes and cutting elements of the missile defense program.
All of those proposed cuts would deal a blow to Boeing's defense division, which generates about 32 billion in sales.
Gates also recommended cancelling contracts that Boeing had hoped to secure, including plans for a new CSAR-X search and rescue helicopter, a long-range Air Force bomber and a series of communications satellites.
"Boeing could face difficult times," the investment firm Collins Stewart wrote in an analysis.
"FCS (Future Combat Systems), C-17 (transport planes) and missile defense are key programs for the company and all face cuts," the firm was quoted by AFP as saying.
Apart from Boeing, the outlook for other defense contractors was not as bleak as anticipated and in some cases largely positive as budget recommendations removed uncertainty, analysts said.
The defense secretary's budget offered more funding for certain weapons programs, including unmanned drones, Lockheed Martin's F-35 fighter jet and its close-to-shore naval ships.
"For Lockheed Martin, the news was good. In our opinion, the key to the company's revenue and earnings growth is the F-35, and the F-35 received strong support," the according to Collins.
Boeing "appears to be most at risk on the downside, with several programs under pressure," Fitch ratings agency wrote.
The planned cutbacks in defense contracts came on top of bad news for Boeing's commercial operations, which has seen a drop in orders for new planes amid a global economic crisis.
The Pentagon's recommendations still need to be formally endorsed by the White House and then approved by Congress, where some lawmakers have already blasted the suggested cuts in weapons projects. (ANTARA)
You can leave a response, or trackback from your own site.