Trump or Clinton will be OK for defense industry: Analyst

Aug. 24, 2016: It’s a light week for relevant commentary from the US aerospace analysts.

  •  Buckingham Research takes a view on the election of either Trump or Clinton on the defense industry.
  • India’s Jet Airways will defer 10 Boeing 787s (Wells Fargo).
  • Aeroflot will transfer its 22 787s to another company (Wells Fargo.)


Buckingham Research

Weekly Insight, Aug. 22, 2016

With 79 days to go, the November election is beginning to dominate A&D investor discussions, especially since both candidates just recently met with the Aerospace Industries Association. Slicing through the political rhetoric, we would view a Clinton victory in November as a neutral to modest positive for defense. We think Clinton will likely continue the policies of the Obama administration. We think a Trump victory would be very bullish for the defense group given the campaign’s strong statements regarding the need for increasing military spending to support a more assertive foreign policy. We would remain bullish on defense regardless of the election outcome.

Boeing may be recommending that Pakistan International Airways (PIA) swap five B777-300ERs they have on order for 787s. If that swap occurs, it’s going to be more difficult for BA to achieve its target of 40 B777 orders this year in order to avoid another production rate cut. We think BA will have to reduce 777 production rates to 4/mo in 2018 and we see that potentially occurring as early as October.
Wells Fargo

Below the Radar, Aug. 22, 2016

Business Standard reported Jet Airways deferred the introduction of the Boeing 787 to limit its widebody capacity addition. Order deliveries are now expected to begin in 2019 from the original year-end 2017 date.

Several media outlets reported Aeroflot will review whether to “transfer” its contract for 22 Boeing 787 aircraft to another carrier. According to Vedomosti, the Russian airline may transfer its contract to Rostec’s leasing company.

News Corp Australia Network reported Jetstar is working on repairs on several General Electric-made engines in its Boeing 787 fleet. The engine problem is reported to “trigger a mid-flight engine shutdown.” The carrier continues to investigate the cause of the issue.


17 Comments on “Trump or Clinton will be OK for defense industry: Analyst

  1. Is it just me or is it a bit sick to be looking at a candidate as to how they affect the profits of the defense industry? (vs the safety of the US)

    Should the take be on capability of being President and how likely one or the other is likely to do something really stupid?

    • Not sick if you are a stock analyst and your job is to opine on the prospects of the companies that you follow. Wall St analysts are primarily stock analysts (deciding which stocks represent a good investment for their clients), who happen to look at a sector (Aerospace & Defense, in this case); They are not sector analysts, who happen to follow stocks, nor are they moral, or even political, arbiters. Therefore this is exactly the analysis that one would expect – it doesn’t make much difference to the Defense companies (and hence Defense stocks) which candidate wins. That is pretty interesting to an investor.

      • Maybe not, but it should. Detached from reality is what leads to people like Mussolini and worse.

          • I did not say he was Hitler, I did say it could lead to worse.

            I do contend he is a Bombastic Clown aka Mussolini and Goering.

            Scott has made statements indicating he feels Trump is bad, I won’t put words in his mouth of course.

            Given the choice of an equally bizarre progressive, I would vote for Kaisch in a heartbeat and I rarely vote for a republican anymore.

            At some point not voting is condoning.

            My folks washed my mouth out at far less than what Trump has spewed.

          • Nope you are selling him short, he is the next Hitler with some Satan thrown in for good measure. If he wins the world ends on Jan 2017 as he can’t wait to start a nuclear war.

  2. .. Boeing 787 fleet. The engine problem is reported to “trigger a mid-flight engine shutdown.”

    Start the flamewars. It would never have happened on good ol’ RR trent 1000’s. Not good news.

    “Earlier this year General Electric issued a service bulletin to operators of Dreamliners using the GEnx engine regarding an issue related to the engine’s transfer gearbox.

    The company recommended Dreamliner operators modify a “dampened radial gearshaft” to prevent “induced resonance failures that have caused approximately eight in-flight engine shutdowns and oil loss events across the world”
    [ ]

  3. “The engine problem is reported to “trigger a mid-flight engine shutdown.”

    – A quick search on Avherald shows an instance on Aug 6th. “The airline reported an oil pressure warning indication prompted the crew to shut the engine down and divert to Guam.”

    • And send a replacement aircraft to rescue the passengers from Guam.
      And then fly in a replacement engine and a crew to do a field engine change.
      And then fly the empty aircraft back to Australia to put it back in service, and freight the broken engine to GE for fixing.

      Guam is a long way out of the way for JetStar

      Many, many $$$$$$$$$

      • It seems RR had some issues with that engine early on as well, not to mention an A380 engine blowup that came incredibly close to taking the aircraft out of the sky.

        I do want to hear definitive on the GEs, no question they have had some problems.

        RR 777 engines as well (ice up the fuel heaters)

        All engine designs are subject to some odd things, GE has had the icing issue.

        Long term they are both good, but I found it interesting GE made almost good on the fuel promise with PIP II and RR had to wait until most recent.

        • And the question is, what is Jetstar doing that no one else seems to be?

      • .. and all this in the dubious belief that flying on two engines is much more economical that doing so on four engines.

        With two engines, the loss of an engine requires an emergency response. With four engines, landing at the nearst airport is not necessarily necessary 😉

        • You got that right, BA flew to London from LA basically the whole way on three engines.

      • Japan Australia flights passes close to Guam anyway. The rescue flight was just the next day flight. The engine change meant the plane was in Guam for around 10 days
        looking at other Jetstar 787 ‘out of service’ over this period shows multiple occurrences in Australia which of course created havoc with their long haul schedule.
        Jetstar Boeing 787-8 VH-VKI, which has been out of service at Melbourne since the evening of 19th August [to 22/8]
        Jetstar Boeing 787-8 VH-VKF, which has been out of service at Coolangatta since 22nd August, -[to24/8]
        Following its overnight delay, Jetstar Boeing 787-8 VH-VKL operated yesterday’s JQ68 Wuhan – Coolangatta this morning
        Jetstar Source

  4. And what is Jet Star doing to the GE engines that is causing them to go tango uniform?

    • As it says
      “eight in-flight engine shutdowns and oil loss events across the world”
      Essentially the GEnx isnt as reliable as its competitor, not that it isnt a great engine

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