Boeing to FAA: Let us fly

Feb 22, 2013
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Boeing to FAA: Let us fly

Feb 22, 2013
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Boeing is meeting with the Federal Aviation Administration to hash out when it might get its grounded fleet of 787’s back in the air after some Dreamliner batteries caught fire last month. The company says it’s trying to get the issues resolved and the planes back in the air as soon as possible — and every day counts.

You know how when somebody hits your car, their insurance has to pay for your rental while your car gets fixed? That’s kind of what Boeing has to do right now. It’s delivered 50 Dreamliner 787s to airlines who can’t use them.

“The airlines themselves are losing significant amounts of money,” says Bob Herbst with AirlineFinancials.com. “They’ve got pilots that are rather well paid and they’re sitting on the ground not earning any revenue.”

Boeing’s going to be on the hook for that — “well into the hundreds of millions of dollars when all is said and done,” Herbst says.

Boeing’s already agreed to pay out $300 million to Qantas for delays not even relating to the battery fire issue. With this latest delay, Herbst says entire routes like Tokyo to San Jose aren’t going into service because they depended on the fuel efficient planes.

New flights like that were kind of the point of the aircraft, says Richard Aboulafia, an aviation analyst at Teal Group.

“The idea behind the 787 was point to point service so passengers could bypass major hubs” says Aboulafia. “There are really valuable markets that haven’t opened up because they’re simply not big enough. By flying directly, you’re basically able to charge these business travelers a premium fee for the privilege of traveling directly.”

Everyone who already bought tickets, is going to want their money back. The final bill, the analysts conclude, all depends on how long the planes stay on the ground. Still, we’re not talking anything that could break Boeing, according to Aboulafia.

“If you look at all their different revenue streams, they’re pretty insulated against technological risk,” says Aboulafia. “This is not a threat to their existence, but it could get painful.”

Extra painful, he says, is that some of the money Boeing pays to airlines, might get used to lease planes from its competitor Airbus.

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