Zacks Analyst Interview Highlights: Hexcel, Delta, Northwest, United and USAir
2008-05-16 12:05:55 -
- Zacks.com releases the latest Analyst Interview. Today's interview is with senior analyst John Nelson Simon, who discusses Hexcel (NYSE: HXL), Delta (NYSE: DAL), Northwest (NYSE: NWA), United (Nasdaq: UAUA) and USAir (NYSE: LCC).
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We know high fuel prices have been taking a toll on airlines recently, but have you seen any negative impact on the airline suppliers under your coverage?
The only suppliers that have been seriously affected are those where most of their revenues come from OEM (original equipment manufacture) as opposed to MRO (maintenance, repair and overhaul, aka the after-market). An example would be Hexcel (NYSE: HXL), which makes a variety of structural materials and assemblies for new-aircraft. Obviously, that is primarily the result in the slippage of new aircraft deliveries, particularly the A380 and 787, not the airlines cutting back on MRO or new-airplane orders (yet).
If anything, after the recent FAA fiasco, there is more MRO going on, not less. However, we will continue to see the airlines ground older, less-fuel-efficient aircraft as they replace them with newer models (or not, in some cases like Delta (NYSE: DAL)/Northwest (NYSE: NWA) or potentially United (Nasdaq: UAUA)/USAir (NYSE: LCC). Keep in mind that a lot of airlines aren't in the U.S. and many of them are doing quite well, particularly most of the airlines in the Middle East, India, China and even Russia, where they have a natural-resources surplus.
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