Dreamliner woes may be blip for Boeing

Airlines maintain orders for plane as company prepares to return it to flight

May 2, 2013 

Last week, on the same day the FAA officially ungrounded Boeing's 787 Dreamliner, American Airlines employees were whooping it up in an aircraft hangar at nearby Boeing Field.

It had nothing to do with the Dreamliner.

Executives and select employees cheered the official delivery of a different plane, a new 777-300ER aircraft. American is the first U.S. carrier to own the dual-aisle plane. Boeing's Frederickson plant builds components for both the 777-300ER and the 787 Dreamliner. The company's skin and spar plant there builds wing components for the 777, and its composite fabrication plant on the same site build 777 tails and 787 vertical tails.

Festivities last week at Boeing Field included a ribbon-cutting, speeches by executives, and applause from the 100 or so workers. In other words, for Chicago-based Boeing Co. - embroiled in a three-month public relations fiasco about batteries that overheated aboard its highly touted 787 Dreamliner - it was business as usual. Another plane out the door.

After 100 days of near-daily news reports about grounded Boeing 787 Dreamliners, casual observers might conclude that Boeing was on the ropes financially and that battery-overheating problems with its new airplane were among the gravest in aviation history. Not exactly.

The number of passengers killed on Dreamliners is zero, as is the number of injuries. The problematic batteries don't even have anything to do with the plane's basic ability to fly. And despite the attention, the grounded plane had little effect on Americans. Chicago-based United Airlines is the only U.S. carrier to have 787s, and it has only six in a fleet of 700 planes.

Maybe most telling about the effect of the Dreamliner battery crisis is its effect on Boeing as a company. "We haven't talked specifics on the numbers, but it's minor in comparison to the overall results, " Boeing Chief Financial Officer Greg Smith said last week in talking about the battery problem's effect on first-quarter earnings, which surpassed Wall Street expectations. So far, the battery episode doesn't seem to have damaged profits of the world's largest aircraft-maker. Indeed, it expects to generate the same companywide profit for 2013 that it announced before the battery crisis, and will this year deliver all the scheduled Dreamliners, 25 of which are completed but parked around Boeing factories because deliveries were halted.

Airlines haven't soured on the company. Boeing's new orders are strong. Not a single customer canceled an order for a Dreamliner, which lists for $207 million, as a result of the battery problems.

And investors seem to believe in the company. Boeing's stock price closed Friday at a five-year high before dropping slightly this week.

F. Carter Leake, an aerospace analyst with BB&T Capital Markets, issued a report last week titled, "The 787 Crisis: Like it Never Happened at All, " saying Boeing's stellar quarter had him "eating a large plate of crow" because of his formerly negative view of the company based on the battery problems.

"Not only did Boeing resolve all issues with the FAA in short order, but it did so at rounding-error cost, " Leake wrote, citing Boeing's success with other airplane lines.

"We are returning to our pre-787 crisis thesis that posited that Boeing's current and planned mix of platforms is arguably the best in its history."

All that's not to say overheating batteries weren't a serious problem. "The grounding of the fleet was a very significant event for Boeing and for our customers, " said Mike Sinnett, chief project engineer for the 787. "We take it very, very seriously."

But experts say the saga will be remembered in the long term only as minor turbulence in launching a highly successful new plane model. Henry Harteveldt, a travel analyst with Hudson Crossing, said he was surprised by the intense interest in the 787's battery.

"No planes crashed, no one was hurt, no one died, " he said. "I don't think the 787 will have a long-lasting black mark or stigma over it.

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