Boeing Attractive to Some Analysts
SEATTLE (
) -- It is too early to say what caused a
on Tuesday, requiring an emergency landing in Laredo, Texas, but investors were quick to sell off
Boeing
(BA) - Get Report
shares.
In early afternoon trading Wednesday, Boeing stock was down $2.19 to $67.07, marking the
second selloff in a week due to 787 problems. Late Friday,
Aviation Week
reported on
delivery delays involving three early customers.
Boeing shares closed Friday at $71.27 and have declined 6% since then.
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Boeing has temporarily halted 787 test flights, which obviously prompts fears of further delays in the program. The first delivery of the 787 to
All Nippon Airways
was initially scheduled for May 2008. The most recent initial delivery target is February 2011.
Some analysts see a buying opportunity. "We would not infer that this problem implies in any way a failure of the 787's electric design," said Davenport & Co. analyst Carter Leake, in an interview Wednesday. In a report, Leake noted that the incident "couldn't come at a worse time for Boeing -- but don't panic." He said "these types of events can offer nice entry points."
The initial problem was smoke in the cockpit, which Leake, a former military and
Delta
(DAL) - Get Report
pilot, said is either because "something -- usually cargo -- is burning" or "there is some type of electrical issue that causes very pungent smoke." Normally, the emergency procedure in response to smoke is to kill all non-critical electrical power sources, he said.
The electrical test equipment crammed into the test flight could have been a source of the problem, Leake theorized; so could human error. Worst-case scenario would be the electrical wiring, which would require a time-consuming solution, he said.
Meanwhile, RBC Capital Markets analyst Rob Stallard wrote Wednesday that he talked to Boeing officials, and the company "is uncertain how long testing will be halted, but we came away thinking that it is likely to be days
or less instead of weeks."
It is too early to say whether the rear cabin fire "was caused by electrical systems or by temporary flight test equipment located in the rear of the plane," Stallard wrote. "In the big picture of the aerospace upcycle, the 787 is just one small piece. We would use any weakness today to build upon aerospace positions."
Boeing spokeswoman Lori Gunther said it will "take some time" for Boeing to figure out what happened. "Data from the airplane is being transported from Texas to Seattle so that our experts can understand what happened prior to, during and after the event," she said.
-- Written by Ted Reed in Charlotte, N.C.
>To contact the writer of this article, click here:
Ted Reed
