The Dream Liner - Analysis

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  • Topic: Boeing 787, Boeing 767, All Nippon Airways
  • Pages : 4 (880 words )
  • Download(s) : 30
  • Published : March 2, 2013
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1. Competitive nature of market (Airbus vs. Boeing)

The commercial aviation world has been dominated for years by the sales conflict between Boeing's 787 Dreamliner and Airbus's A380

• Airbus A380 – Double of the 787 Dreamliner passengers

• 787 Dreamliner – Half of Airbus’ passengers

2. Cost per unit
By the end of 2004, customer-announced orders and commitments for the 787 reached 237 aircraft. Boeing initially priced the 787-8 variant at US$120 million, a low figure that surprised the industry. In 2007, the list price was:

• US$146–151.5 million for the 787-3

• US$157–167 million for the 787-8

• US$189–200 million for the 787-9

Price rose due cost of labor and transportation.

3. Financial burden

Despite the grounding, Boeing continues producing the Dreamliner. Below is a scenario of what would happen if the Dreamliner stay grounded.

• 6 months – some cancellation (6 months into it, subcontracts needs to cancel it because it will be out of business)

• 9 months grounding – big problems

4. Stock performance

Boeing (BA) shares have been stoic, as seen in a stock chart, in the face of the indefinite grounding worldwide of 787 Dreamliners until authorities can figure out why batteries malfunctioned.

[pic]

The stock’s performance factors consider by investors:
• Believe Boeing will fix the issues
• Airlines have few options beyond waiting for the fix and then taking delivery of the 787s they’ve ordered • Airbus isn’t close to delivering its similar, fuel-efficient wide-body • And doing without new planes would hamper airline operations

It’s a remarkable position of strength, and one few customers would want to find themselves on the other side of. With a PE ratio of about 15 and a dividend yield of 2.6%, Boeing isn't cheap but the support for the stock, even in the face of such an embarrassing setback, is amazing.

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