Order Backlog Might Keep Aerospace ETFs Afloat

Aerospace companies are forecasting a drop in orders, which might leave some exchange traded funds (ETFs) grounded if it comes to pass, thanks to years of orders left to fill.

The two largest plane makers - Boeing (BA) and Airbus - have a backlog of orders stretching so many years ahead, that if you were to order a new aircraft now, it may not be ready until 2017, reports Stephen Beard for Marketplace.

Aircraft orders have slowed, though, and 20 airlines around the world have already gone bust. Many carriers in the United States and Europe are struggling to buy more planes. Big orders are expected from the Middle East. But overall, sales could drop 50% from last year and 20% of backorders may be canceled.

Rising fuel prices are the primary culprit as the industry has tried to find ways to cope with oil prices it wasn’t built to contend with.

The PowerShares Aerospace & Defense (PPA) was down slightly today, and year-to-date is down 19.6%. Boeing is 7.7% of the fund. The iShares Dow Jones Aerospace and Defense (ITA) is down slightly, as well, and is off by 20.8% year-to-date. Boeing is 8.6%.

Posted in Categories: Contributor, Eurozone, External Research, Stocks, UK, USA.

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