B/E Aerospace may benefit from airline merger

By Doris Frankel

CHICAGO (Reuters) - Option traders may be betting on a recovery in the shares of B/E Aerospace Inc (BEAV.O: Quote, Profile, Research, Stock Buzz) on hopes the world's biggest maker of plane seats will benefit from the latest proposed consolidation in the airline industry.

Delta Air Lines Inc (DAL.N: Quote, Profile, Research, Stock Buzz) said on Monday night it planned to buy Northwest Airlines Corp (NWA.N: Quote, Profile, Research, Stock Buzz) in a bid to create the world's largest airline by traffic.

B/E Aerospace shares fell 44 cents to close at $34.01 in Nasdaq trading. Its stock has dropped 35.7 percent for the year to date.

"Assuming the merger goes through, the corporate identity will be a big benefit to B/E Aerospace as they are the leader in commercial and private airline interiors," said Jon Najarian, a founder of Web information site optionmonster.com.

Even though B/E Aerospace shares were down, Najarian notes that option buyers came in late in the day and began placing bullish bets for the May earnings and/or improved outlook as a result of the pending Delta/Northwest deal.

B/E Aerospace would stand to benefit from the upgrade cycle as the carriers spend to improve their aging fleets, he added.

The Wellington, Florida-based company is due to report quarterly earnings on April 28 after April options expire.

FBR Capital Markets Corp reiterated in a research note its outperform rating and $55 price target on B/E Aerospace on Tuesday, saying airline consolidation has positive implications for the company in the long term.