Business Round-Up
Dreamliner costs drag on Boeing’s positive news
November 1st 2014
Boeing has reported third-quarter net income of $1.36 billion, up 18% or $200 million, compared with a year ago, with the manufacturer’s commercial airplanes unit performing strongly. Its revenue increased 15% year-on-year, to $16.11 billion. Deliveries rose 9%, to 186 commercial aircraft, in the reported three months. Read More »
The company booked 553 orders in the quarter, which brought the total backlog to 5,500 aircraft valued at $490 billion, with more than half of the commitments from the Asia-Pacific. However, Boeing shares still fell almost 4% following the profit announcement, as investors fear another hike in Dreamliner B787 production costs. According to analysts, the groundbreaking airline’s deferred production cost has risen 4%, to above $25 billion, which exceeds the $25 billion cap Boeing had forecast and will put a critical drag on cash flow.
Earlier this month, Boeing settled with Air India for losses the carrier suffered from repeated B787 groundings in 2013 that included battery fires, loss of revenue due to recurrent technical issues and the resultant adverse publicity the carrier endured because of the flight cancellations and service failures. Fears of a potential onslaught of similar compensation claims continue to weigh on Boeing’s share price, analysts explained. Asia-Pacific”s All Nippon Airways was the B787 launch customer. The region’s carriers form a very large portion of the aircraft type’s order book.
