For now everybody is confident that this is just a cyclical downturn and not a major crisis. Nevertheless, if you have cash or credit to spend you can get a very good deal from either Boeing or Airbus. The CEO of Qatar Airways was telling me last night that it's very much a buyers' market and that he got quite a deal from Airbus' sales supremo John Leahy when negotiating the purchase of 24 narrow body jets.
So if it's a good time to buy jets is it a good time to buy aerospace stocks. Nomura's Nick Fothergill says that investors in the sector should expect quite a bit of volatility over the next 6 months but for those with a 3 year + time frame there are opportunities. He favors EADS saying that while other US prime contractors and supply chain firms have had a run-up, the European firm has lagged. The big caveat, however, remains the fate of the military transport aircraft the A400M. If European governments were to decide not to take the plane then the implications for EADS could be significant. On the other hand, there is very little priced into the stock for a potential win when it comes to the soon to be re-opened competition for the Pentagon's purchase of a fleet of mid-air refueling tankers.
If you remember, last time round EADS along with its partner Northrop Grumman won the competition but the Pentagon had to re-open the tender because Boeing rounded up enough people in Washington to force a rematch. This time round, however, Boeing looks stronger because it's going to be tough for the Obama administration to send jobs overseas and the US firm has put together a more compelling package for the US Air force.
This competition will certainly be one of the big stories for the aerospace sector this year and is the main subject of my conversation with Ron Sugar, the CEO or Northrop Grumman, on CNBC's World Wide Exchange.