What next for Boeing and the Dreamliner?

It was billed as the jet of the future but technical issues have forced airlines to ground planes. What does this mean for the $24.2bln fleets of Middle Eastern carriers?

“This may be more extreme due to complex mix of new materials, systems and manufacturing processes but there were problems for example with the Airbus A320 in its early days as with the Boeing 747 and DC-10, all of which went on to become safe and commercially successful aircraft,” says Strickland.  

While it may not be the first to experience technical difficulties the financial impact could be huge. Boeing shares are already down while financial risks to the company could include compensation, design and manufacturing expenses and delivery disruptions, according to Howard Rubel, a Jefferies Group analyst.

In a note to investors, Rubel estimated that reworking the jet to fix electrical problems could cost between $250m and $625m but emphasised that little is still known about what it will take to fix the problem and that Boeing’s suppliers may bear some of that cost. Shares in Meggitt, whose subsidiary Securaplane makes part of the charger used for the Dreamliner’s battery, fell 7.8 pence ($0.12) to 429.4 pence last week.

Despite rallying behind the Dreamliner, airlines may be tempted to switch their focus to the A350, Airbus’ answer to the 787. The aircraft is already the model of choice for Emirates Airline, which currently has 120 A350s on order and no 787s. Like the Dreamliner, the A350 is built using composite materials and lithium-ion batteries but Airbus has been quick to stand by its planes, insisting it will not encounter the same problems.  “We are confident our design is robust” and “don’t see any reason to change,” Airbus chief executive Fabrice Bregier told reporters shortly after announcing a record year for the planemaker.

But the A350 isn’t scheduled for delivery until 2014, with all of the early delivery slots taken and the long lead time between ordering an aircraft and delivery coupled with the financial implications means regional airlines are unlikely to shift their focus to rival Airbus.

“I can’t see any 787 customers in the Middle East suddenly cancelling orders — what would they replace them with at such short notice? The 777 line is packed out until 2016 while the smaller and older A330 family is also heavily sold out so slots at Boeing and Airbus would be nigh on impossible to procure today,” says Ahmad.

“The aircraft promises so much in terms of fuel efficiency and range and the airlines need this. Until Airbus’ A350 flies, there is no alternative, order backlogs are also lengthy so ability to switch is pretty well non-existent,” adds Strickland.

How long Boeing’s customers are willing to stick by their dream jet depends on how quickly the planemaker can restore the 787’s battered confidence.

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

NOTE: Comments posted on arabianbusiness.com may be printed in the magazine Arabian Business

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

All comments are subject to approval before appearing

Further reading

Features & Analysis
Saudi Arabia outsources airport operations

Saudi Arabia outsources airport operations

The signing last week of public-private partnerships to manage...

The cost of the US laptop ban

The cost of the US laptop ban

Aviation analysts and airline bosses are warning of significant...

Q&A: The laptop ban and what it means when flying from Dubai and Abu Dhabi

Q&A: The laptop ban and what it means when flying from Dubai and Abu Dhabi

Couldn't a laptop with a bomb inside still pose a danger within...

Most Discussed