Home » Leonardo volatile in Piazza Affari, the rebus of disputes with Boeing remains

Leonardo volatile in Piazza Affari, the rebus of disputes with Boeing remains

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(Il Sole 24 Ore Radiocor) – Leonardo – Finmeccanica volatile in Piazza Affari after the 7% thud accused on the eve of the event of the defective components supplied to Boeing. These are parts delivered in the last three years which, according to the Federal Aviation Administration, do not jeopardize the immediate safety of flights, although it remains to be clarified whether aircraft recalls will be necessary, while those not yet delivered will be reworked as needed. With the markets closed on Thursday, the Italian aerospace group admitted the circumstance, but at the same time specified that the defective components were actually made by the subcontractor Manufacturing Processes Specification, which is already under investigation by the judiciary. “Leonardo is an injured party,” the company underlined, adding that it will not assume any charges in this regard. Leonardo also revealed that Manufacturing Processes Specification is no longer its supplier.

“We believe that disputes cannot be excluded a priori and we ignore how solid Manufacturing Processes Specification is for the possible exercise of the right of recourse”, however, commented the Equita analysts, adding: “In light of the elements available, we believe that the reaction of the yesterday’s title already discounts the risk of any non-recurring charges, but the reputational problem remains for the aerostructures division (production of fuselages and wing parts for Boeing, Airbus and ATR) which has been in poor condition for years “. The sim experts estimate that the division in 2021 will have a turnover of over 600 million (about 5% of the group’s turnover), of which about half comes from Boeing, and operating losses of 150 million (14% of the group). Free cash flow, again according to Equita, is negative on the group total of over 100 million. Equita is confident that with the publication of the third quarter results, the presentation of a division reorganization / conversion plan will also be expected, which could represent the turning point after years in which no structural interventions have been made. So for now Equita maintains the ‘buy’ recommendation on the Leonardo, for which it evaluates a price target of 8.8 euros, although it defines the investment as risky.

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