Question-and-Answer Session
Operator
Thank you. (Operator instructions) Our first question today comes from Robert Spingarn with Credit Suisse.
Robert Spingarn – Credit Suisse
Good morning.
Greg Powell
Good morning.
Robert Spingarn – Credit Suisse
A couple of questions, one for Tom, one for Amin. Amin, maybe I’d start with you. It’s a broader-based question on a new bill from Boeing and Airbus. There’s this contrarian theory out there that maybe, given the higher fuel prices that you cited and the fact that both air framers are going to keep deliveries largely flattish, that maybe some of these aircrafts that have been grounded before heavy maintenance don't make it back into the fleet. Could you comment on that? And also talk a little bit more about what’s embedded from a new build rate perspective in your guidance.
Amin Khoury
Sure. Well as you know, capacity has in fact started to creep back in. In the month of September, capacity did creep back in, and it appears to be doing the same thing in October. We haven’t changed our new build outlook. We continue to think that the delivery of narrow bodies will come down in 2010 as compared to the outlook for narrow-body deliveries that pretty much everyone has, including the air framers themselves.
So embedded in our guidance is a lower level of narrow-body deliveries as compared to essentially all of the forecasters. And the principal reason is basically retrofit activity in 2010, which has been deferred from 2009. So we feel fairly confident about it. And this recent pickup in the consumables and spares activity, which gives us some cause for hope here.
And then your second question was for Tom?
Robert Spingarn – Credit Suisse
Yes, I was going to ask Tom if he could walk through – Tom, can you walk through what drives your cash flow forecast for next year, maybe talk about the different working capital accounts?
Tom McCaffrey
Yes. Our expectation is for – just walking through some of the major components. I think we’ve given you the earnings guidance. CapEx for next year should be right around $50 million, which is up from prior years. And that’s really as a result of investments to support the $2.3 billion of the – of awarded, but un-booked SFE programs that we’ll begin to deliver in 2011. So we’ll begin to invest in PP&E into next year. So you should expect CapEx of above $50 million, and for DNA [ph] to be roughly the same amount, but between $50 million and $55 million. And in terms of working capital. You should expect to see some modest improvements in our inventories as well.
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