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Analysts Cut Boeing Profit Estimates

Ratings and profit estimates were cut after the airline manufacturer said it would reduce production of some jetliners next year due to the global economic crisis.

HARTFORD, Conn. (AP) -- Shares of Boeing Co. fell sharply Monday as analysts cut their ratings and profit estimates after the airline manufacturer said it would reduce production of some jetliners next year due to the global economic crisis.

Boeing was the second biggest loser among Dow Jones Industrial Average components, exceeded only by General Motors Corp.

Jefferies & Co. Inc. analyst Howard Rubel reduced his 2009 earnings estimate to $4.75 per share from $5.35 per share. He also cut his 2010 estimate to $5.10 per share from $5.90 per share and to $5.20 per share from $6 per share for 2011.

Analysts surveyed by Thomson Reuters expect profit this year to be $5.06 per share, $4.93 per share next year and $4.57 per share in 2011.

Rubel cut his price target to $52 from $60 and maintained a "Buy" rating.

Cowen & Co. analyst Cai von Rumohr reduced his rating for Boeing to "Underperform" from "Neutral", citing its exposure to Pentagon program cuts announced last week by Defense Secretary Robert Gates.

The analyst estimates profit to be $4.35 per share next year and $3.65 per share in 2011.

Barclays Capital analyst Joseph F. Campbell slashed his price target to $50 from $66.

"Boeing finally conceded a reduction in its production plans," he said in a note to investors. "Cuts were, however, made begrudgingly, thus far only to the widebody plans, not starting until the second half of 2010 and ending (in) December 2011."

Campbell cut his 2009 earnings estimate to $3.67 per share from $4.50 per share and reduced his 2010 estimate to $4.80 per share from $6.60 per share. He said his reduced forecast is based on lower deliveries for narrow-body and wide-body planes and relatively flat revenue.

"Despite market expectations for the worst traffic declines ever, we expect the smallest production declines ever, but continued uncertainty about production levels could keep BA shares volatile," Campbell said.

Boeing has been struggling with sharply lower orders for commercial planes this year as air travel wanes. Airlines have cut flights and some have delayed orders and deliveries of new jets. Tighter credit markets also have made it more difficult for potential buyers to get loans for new planes.

The Chicago-based company said April 9 it will reduce monthly production of its twin-aisle 777 to five airplanes from seven starting in June 2010. Boeing also said it will delay earlier plans to slightly increase production of its 747-8 and 767 planes.

Boeing expects the changes will result in an unspecified number of new job cuts.

Rubel said in a note to investors he expects a cut in production of the 777 in mid-2009, but believes production will increase for the 767. The delay in production of the 747-8 is not surprising because of the weaker market and development delays, he said.

Rubel previously reduced his estimated 747 schedule, but did not expect an impact on earnings. And he said he expects a decline in production of 737s by mid-2010, though the line is overbooked.

"Some domestic markets outside of the U.S. are starting to show some improvement in traffic, however," Rubel said.

In a note to investors, von Rumohr said continued drops in revenue per passenger mile will likely result in "growing pressure" for additional production cuts.

And lower oil prices and limited credit available to airlines will restrain replacement when the industry begins to turn up again, he said.

Shares fell $2.25, or 5.8 percent, to $36.90 in afternoon trading.

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