July 22 (Bloomberg) -- Boeing Co., with about seven years of plane orders, sees fewer cancellations than rival Airbus SAS from airlines coping with a plunge in profits. Investors say they need more evidence.

Boeing shares have fallen by more than a third in a year as the second-biggest maker of commercial aircraft delayed its new 787 Dreamliner and lost a $35 billion Air Force contest. Two dozen carriers have folded or sought bankruptcy protection this year and some survivors have scrapped or deferred jet orders to cope with oil costs and weakening economies.

``We do not see upward momentum in Boeing stock until investors regain some confidence in the financial health of the world's airlines and the economic outlook, together with some tangible progress on 787,'' London-based Bank of America analyst Harry Nourse wrote on July 18.

Chief Executive Officer James McNerney's commercial-airlines team struck a more positive note at last week's air show in Farnborough, England, where the $64.3 billion in combined orders for Boeing and industry leader Airbus fell short of previous gatherings in Dubai and Paris.

Airbus CEO Tom Enders said July 12 the company may lose as much as 27 percent of its backlog in a worst-case scenario. Toulouse, France-based Airbus, owned by European Aeronautic, Defence & Space Co. of Paris and Munich, has a backlog of 350 billion euros ($557 billion) in orders.

`Build Through'

The next day, Scott Carson, McNerney's chief for commercial airplanes, said he didn't anticipate that level of cancellations at Boeing. The planemaker has a $271 billion backlog that may keep it busy for the next seven or eight years.

``The difference now is that we have enough of a backlog that we could maybe build through until the next order cycle,'' Carson said before an event at the show.

Chicago-based Boeing will probably say tomorrow that second- quarter net income fell to $1.25 a share from $1.35 in the year- earlier period, according to the average estimate of 15 analysts surveyed by Bloomberg after the planemaker announced a charge on July 10. Including five analysts who didn't update their figures, Boeing is predicted to earn $1.31 a share.

Boeing said the quarter's earnings will be reduced by 22 cents a share for charges caused by delays on its Wedgetail Australian military surveillance plane program. The U.S. Air Force this month agreed to reopen parts of a separate, $35 billion competition that Boeing lost to Northrop Grumman Corp. and EADS, after Boeing protested the decision.

Shares

Boeing rose 53 cents to $68.77 at 11:25 a.m. in New York Stock Exchange composite trading, paring the decline this year to 21 percent. EADS fell 1.2 percent in Paris to 12.34 euros. The stock has dropped 44 percent this year, hurt in part because a strengthening euro cut the value of dollar-denominated orders.

Airbus, which surpassed Boeing as the biggest commercial planemaker in 2003, won about 62 percent of the orders announced at the Farnborough show. Boeing's announced orders were lower in part because it no longer delays disclosing deals until such industry gatherings.

Orders were down from business announced at shows in Paris and Dubai last year, and most came from Middle East airlines such as Etihad Airways, the Abu Dhabi-based national carrier of the United Arab Emirates. Mideast governments are investing revenue from the same surge in oil prices that is eroding airlines' earnings elsewhere in the world. Jet fuel in New York has surged 81 percent in the past year.

`Completely Cocky'

McNerney said he's optimistic as long as customers have access to money to buy or lease aircraft, because airlines need the greater fuel efficiency provided by new planes. ``Of course I'm watching the capital markets carefully,'' McNerney said.

The U.S. planemaker still may be too optimistic, New York- based Macquarie Research Equities analyst Rob Stallard said on a July 18 conference call about the show. ``Boeing seems completely cocky about how their situation is,'' Stallard said. ``I thought Scott Carson saying there was no risk to the backlog was an overstatement.''

Boeing built the most planes last quarter since the final three months of 2001, delivering 126 jets, an 11 percent increase from the year-earlier quarter. Deliveries are important because that's when a planemaker gets paid.

Boeing may see a decline in both the number and value of orders as carriers buy narrow, single-aisle airplanes, Goldman Sachs Group Inc. analyst Richard Safran in New York wrote in a July 14 note. The company won 48 percent fewer orders last quarter than a year ago, he said.

Selling Cheap Planes

``Not only are orders falling in units, but they are falling even more in dollars as the mix has shifted far more towards narrowbodies,'' he wrote. Short-haul 737s, the most widely flown commercial jetliner, cost $67.5 million on average at list price compared with $239.5 million for the widebody 777.

Safran estimates that total Airbus and Boeing orders at Farnborough fell 67 percent to 273 planes, not counting commitments or customers whose orders had been previously logged but not identified by name until the show.

``Management generally appears to be more relaxed on the outlook than investors,'' Credit Suisse analysts including Robert Spingarn from Baltimore said of planemakers in a July 21 note.

To contact the reporter on this story: Susanna Ray in Chicago at sray7@bloomberg.net

Last Updated: July 22, 2008 11:30 EDT