Tickers in this Article: BA, CAL
Boeing (NYSE:BA) shares remained grounded today, dropping nearly 9% this morning after the company delayed the test flight of its new 787 Dreamliner once again. This revolutionary airplane - made of carbon-composite materials, has been long awaited by customers and investors alike; but, production problems and a labor strike have kept the test flight at bay for nearly two years now. This most recent delay is due to structural modifications that are needed to reinforce an area within the side section of the aircraft, where the wing joins the body

IN PICTURES: 10 Biggest Losers In Finance

Dreamline or Pipe Dream?
Although these delays may seem like yet another disappointment in a tough year for the airline manufacturers, we must take a look at the situation with a more balanced eye. Yes, throughout all the delays so far, net orders for the upcoming Dreamliner are down about 45% net of new orders. But keep in mind that this isn't the first time a new plane has seen delays. The 747, when it was first developed, saw much more in terms of setbacks, but surmounted all of its issues to become what the Discovery Channel called one of the world's most recognizable aircraft. I would much rather see a new plane delayed by a few more months if that's what it takes to prevent any surprises at its service ceiling of 43,000 feet!

But yes, I must agree, this rosy look is definitely from a customer's point of view, rather than an investor's. Being happy with delays, is rarely something that you would expect from the owners of a company. But despite this most recent holdup, the dream will become a reality one day, and when it does, the fruits of the company's labors will be seen. Spending extra time now to create a useful and reliable aircraft will only help Boeing going forward.

As far as some estimates of what can be made when the plane is finished, we can extrapolate the existing orders by the current cost of approximately $152.75 million for the 787-3 model, $166.25 million for the 787-8, and $199.5 million for the 787-9. According to Boeing, there are currently 28 orders for the 787-3, 627 orders for the 787-8, and 211 orders for the 787-9. This equates to a revenue of around $150 billion - not bad, considering 2007 and 2008 revenue came in at only $66 billion and $60 billion respectively. (Learn more about how companies make money in our related article Revenue Projections Show Profit Potential.)

Fly On, Boeing
So, Boeing, I support you. Take your time and get it right. Your customers will thank you, and that will only help you in the future. I for one, cannot wait to ride on one of these amazing jets - and I'm sure I'm not the only one. This could definitely mean a better future for Boeing's customers, like American Continental Airlines (NYSE:CAL), which has ordered 25 of these jets; or Air Canada, which is lined up for 37 of these cutting-edge machines.

For further reading on investing in this industry, be sure to check out our Airline Industry Handbook.

comments powered by Disqus

Trading Center