Boeing Falls Most Since '02 on Concerns Over AIG Unit (Update3) By Thomas Black Sept. 17 (Bloomberg) -- Boeing Co. fell the most in six years amid a broad market decline and investor concern that the government takeover ofAmerican International Group Inc. will affect a leasing unit that's one of the planemaker's largest customers. Boeing fell $4.72, or 7.7 percent, to $57 at 4 p.m. in New York Stock Exchange composite trading, the biggest percentage drop in the Chicago-based company's stock since Aug. 13, 2002. The shares have dropped 35 percent this year. The Federal Reserve Board agreed yesterday to an $85 billion bailout of AIG to keep the insurer from collapsing. The U.S. government will take a 79.9 percent stake in AIG and may sell assets to pay back the loan. Investors are nervous about what will happen to the International Lease Finance Corp. unit, saidRichard Tortoriello, an analyst with Standard & Poor's. ``People are just running scared today,'' said Tortoriello, who is based in New York. The possibility of changes at ILFC, the largest lessor of planes to airlines, adds to concerns about the continuing machinists strike at Boeing. The walkout could further delay the Dreamliner program, which in turn would affect revenue at the planemaker, Tortoriello said. ILFC is ``one of the largest'' Boeing customers with 102 planes currently on order, Boeing spokesman John Dern said in Chicago. ``Leasing companies have certainly taken on an increased importance for both Boeing and Airbus,'' he said. Airbus Orders Airbus SAS, the world's biggest planemaker and a unit of European Aeronautic, Defence & Space Co., has delivered 556 aircraft to ILFC in the last three decades. ILFC has orders for 53 aircraft from the Toulouse, France-based company. ``We are watching the situation closely,'' said Airbus spokesman Stefan Schaffrath. Steven Udvar-Hazy, ILFC's founder, may lead an effort to buy the business back from AIG, the Wall Street Journal reported today, citing unnamed people. Udvar-Hazy has been in discussions with potential investors since Sept. 14, though a purchase may be difficult because of tax considerations, the Journal said. The company was sold to AIG in 1990. ILFC declined to comment. U.S. stocks tumbled today in the wake of the AIG takeover, raising concern that more of the nation's biggest financial companies will fail. This week, Lehman Brothers Holdings Inc., once the fourth largest U.S. securities firm, filed for bankruptcy. About 27,000 Boeing machinists walked off the job Sept. 6 on demands to curb outsourcing aircraft work to contractors and to raise compensation. The strike is expected to last at least a month, Boeing Chief Financial Officer James Bellsaid Sept. 10. To contact the reporter on this story: Thomas Black in Monterrey, Mexico, attblack@bloomberg.net.
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Thursday, 18 September 2008
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