Analysts at Bernstein on Monday issued a note on Boeing Co. (NYSE: BA) claiming that both the U.S. aircraft maker and its main rival, Airbus, will benefit from cost cuts for the rest of the decade because “most of every dollar of cost savings will flow to margin.”
The note, cited at Leeham News, goes on:
This has not been the case in prior cycles because backlogs then tended to be only about three years of production, rather than the eight years that we see today. In those cycles, Airbus and Boeing would cut costs, but then compete away the value. That price competition will now be happening primarily on deals for delivery after 2020.
It’s pretty hard to deny that most of the news around Boeing has been less than upbeat: the company’s 2016 guidance is less than expected, it practically gave away 25 of its 737-700s to keep Bombardier’s new CS100 out of United’s fleet and it may fire as many as 8,000 workers over the course of the year.
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