There are plenty of witty plays on words for the bad run of luck that 2013 has brought to Boeing (NYSE:BA): the Dreamliner is a nightmare, Boeing's stock is crashing and many more witticisms that may be unfair. One thing is certain: Boeing is not having a good 2013 thanks to the company's newest aircraft, the 787 Dreamliner.

Aviation insiders have called the Dreamliner the most technologically advanced passenger aircraft ever made, but that came at a cost. September 2011 marked the first delivery for the aircraft, but that was three years late and billions of dollars over budget.

Airlines around the world placed 848 orders; to date, Boeing has only delivered 50. Even worse, because of recent events, all deliveries are on hold until Boeing solves technical issues with the aircraft.

SEE: Industry Handbook: The Airline Industry

The Timeline
On Jan. 7, a fire broke out at Boston's Logan Airport. Investigators traced the fire to a Dreamliner's lithium-ion battery in a compartment that housed an auxiliary power unit. The next day, a fuel leak caused a Japan Airlines flight to abort, again at Boston's Logan Airport.

Finally, a Japan Airlines flight had to make an emergency landing after pilots noticed a message in the cockpit indicating a battery problem. After landing, an inspection revealed fire damage to the battery. This prompted Japan Airlines and All Nippon Airways to ground their fleets of 787s.

Up until this final incident, safety officials had been silent. New aircraft often have small technical problems. With 50 aircraft in service, a couple of aircraft experiencing relatively minor problems was nothing that indicated a systemic issue.

On Jan. 16, the Federal Aviation Administration (FAA) grounded all Dreamliners until the problems connected to the lithium-ion batteries could be traced. Although the FAA only has jurisdiction over U.S. airspace, most aviation authorities around the world follow FAA directives. This effectively grounded all Dreamliners.

The investigation into the cause has, so far, revealed nothing. National Transportation Safety Board investigators reported that the battery that caught fire in Boston functioned properly.

Officials hoped that the battery was faulty or overcharged because these problems would be a relatively easy fix. Instead, the investigation will turn to areas that would require larger, more costly fixes.

SEE: Earnings Forecast: A Primer

The Stock
Investors want to know what will happen to the stock. Since the first incident in Boston, the stock is down only 2.59%. Because of the latest Dreamliner troubles, Wall Street analysts have downgraded the stock, and BB&T (NYSE:BBT) downgraded the stock twice in recent weeks - first, from "Buy" to "Hold" and more recently from "Hold" to "Underweight."

BB&T believes that the battery issue is significant. It advises investors not to start new positions in the stock until Boeing addresses the issue to regulators' and Wall Street's satisfaction. Goldman Sachs (NYSE:GS) also removed Boeing from its conviction buy list, citing the current Dreamliner issues.

Could the Dreamliner bring down Boeing's stock? Probably not. Boeing bulls point out that despite a string of bad news and analyst downgrades, the stock is down only 2.59% and the idea that airlines will cancel orders is probably not accurate.

Not only do airlines understand that problems with new aircraft are normal, but canceling the order means starting at the bottom of the waiting list for another aircraft. For those further down the waiting list, the current problems along with future issues will be solved long before they take delivery of their 787s.

With a backlog of 848 aircraft, Boeing may experience short-term, far-too-public issues with the Dreamliner. Investors know that once Boeing addresses these growing pains and any future issues, the Dreamliner will be a revenue driver.

SEE: 5 Must-Have Value Metrics For Investors

The Bottom Line
Should you buy Boeing right now? BB&T may have it right in advising to wait until the headwinds are gone. Companies knee-deep in negative press are not a good place to be for most investors. Even the pros are largely staying away.

At the time of writing, Tim Parker did not own any shares in any company mentioned in this article.

Related Articles
  1. Options & Futures

    Use Options to Hedge Against Iron Ore Downslide

    Using iron ore options is a way to take advantage of a current downslide in iron ore prices, whether for producers or traders.
  2. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  3. Markets

    Why Gluten Free Is Now Big Business

    Is it essential to preserving your health, or just another diet fad? Either way, gluten-free foods have become big business.
  4. Professionals

    Chinese Slowdown Affects Iron Ore Market

    The Chinese economy's ongoing slowdown is having a major impact on iron ore demand.
  5. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  6. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  7. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  10. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!