Despite another punishing day on Wall Street -- where stock prices plummeted more than 500 points, dragging the Dow Jones Industrial Average down to 9,447 -- the Pentagon’s main weapon systems builders report they are well-positioned to weather the credit crisis that is rocking global markets, Joseph Campbell of Barclays Capital told investors today.
Campbell, who analyzes aerospace and defense firms, conducted an informal survey asking firms that he follows to sketch out potential impacts of the credit crisis.
“Nearly all of the companies in our universe responded that they did not expect the credit crisis to have any impact on their financial liquidity or their ability to access credit markets,” he writes in a research note. “Most said they had no plans or expectations of needs to access credit markets and that their current cash on hand, expected cash flows, and credit facilities already in place would likely be adequate for all of their expected needs.”
Nearly all aerospace-defense companies in our universe have very good credit ratings, strong cash flows, and generally large amounts of cash on hand. As a result, we do not expect the credit crisis to have large impacts on the industry’s access to cash. The main impact we believe will be to weaken the global economy and to make credit for aircraft financing harder to find and more expensive to obtain.
-- Jason Sherman