The Boeing (NYSE: BA) 787 Dreamliner has been delayed for a third time and deliveries to airlines may not begin in earnest for a year. The news is bad for Boeing, but it is worse for some of the airline partners who were counting on a fixed schedules for getting the new plane into service. The Dreamliner flies farther, saves more fuel, and carries more passengers than many aircraft in service now.
Several airlines, including Qantas, New Zealand Air, Air India, and All Nippon will all ask for money because of the delays. According to Reuters, "More than 50 airlines are waiting for 892 Boeing 787s, worth a combined $145 billion at list prices."
The news is very tricky for Boeing investors to assess. There is an excellent case that some of the airlines which expected the 787 this year and next have legitimate claims. Some might even argue that they can cancel their orders and buy a competing product from Airbus. The costs to Boeing could stretch into the tens of billions of dollars. But none of the airlines has made public the value of its damage request. Boeing also might elect to counter these claims, perhaps in court. Of course, being involved in a lawsuit with your largest customers is rarely a good idea.
One thing Boeing's shareholders can be sure of is that the mess is going to cost some money, and that usually moves a company's share price down.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
4-10-2008 @ 4:49PM
Dennis said...
Whenever Boeing decides that it a very competitive market and they can't take anything for granted they will start meeting their goals. They may not have any orders by then.
4-12-2008 @ 6:57PM
VEWenneker said...
This never ending and escalating fiasco for Boeing is what happen's when you and our government are willing, if not wanting, to "Outsource" our crumbling North American Aviation Industry. Imagine the ramification's on our economy. Because of Boeing and MichroSoft, the State of Washington used to have the most millionair's per capita. That, very sadly, is no longer the case. What the hell is it with Congress passing all these "Free Trade" legislative packages. We are selling out our country and it;s once vibrant economy. Long gone are the day's when a dollar had some value and the federal cash reserves to keep our dollar strong. Yes, of course I know all things change with time, but the rapidity with which our Congress helps us to "hurt and suffer" is very close to Act's of Treason...and we do nothing to correct this flood tide. Thank you. I remain,
Very sincerely,
Verle E. Wenneker
www.VEWenneker@AOL.com
4-12-2008 @ 6:58PM
VEWenneker said...
This never ending and escalating fiasco for Boeing is what happen's when you and our government are willing, if not wanting, to "Outsource" our crumbling North American Aviation Industry. Imagine the ramification's on our economy. Because of Boeing and MichroSoft, the State of Washington used to have the most millionair's per capita. That, very sadly, is no longer the case. What the hell is it with Congress passing all these "Free Trade" legislative packages. We are selling out our country and it;s once vibrant economy. Long gone are the day's when a dollar had some value and the federal cash reserves to keep our dollar strong. Yes, of course I know all things change with time, but the rapidity with which our Congress helps us to "hurt and suffer" is very close to Act's of Treason...and we do nothing to correct this flood tide. Thank you. I remain,
Very sincerely,
Verle E. Wenneker
www.VEWenneker@AOL.com
4-13-2008 @ 3:23PM
Robert Clark said...
Unfortunately, Douglas McIntyre misleads folks with his 'What will Boeing (BA) pay airlines for late planes?' article. The Reuters articles he reffered to only said that some airlines "may" ask for money if their tactical plans were adversely impacted by 787 delays.