Military

Dreamliner Grounding to Cost Boeing Some Money

787 With Mt Rainier in DistanceK65116
Source: courtesy Boeing Co.
Safety problems aside, the grounding of its 787 Dreamliner is likely going to cost the Boeing Co. (NYSE: BA) some cash. Japan Airlines, which operates seven of the planes, said today that the grounding will cost it about $7.5 million through the end of March. The airline plans to extract a payment from Boeing to compensate for the lost revenue.

Other carriers that operate the 787 Dreamliner, including Poland’s LOT, Japan’s All-Nippon Airways (ANA), Qatar Airways and Air India, either have or are considering seeking compensation from Boeing for the revenue lost due to the aircraft’s grounding. ANA cancelled 459 flights in January, which cost the company an estimated $15 million in revenue. ANA claims about a third of the Dreamliners that have been delivered so far.

While the grounding is in effect, Boeing will not deliver any additional planes, adding to the impact on the company’s woes. Even if the aircraft maker agrees to pay all the compensation claims, the hit to the bottom line is manageable as long as the problem with the electrical system can be corrected quickly and reasonably cheaply. But the longer the grounding drags on, the more likely that the fix is either complicated or expensive or both. That’s Boeing’s bigger problem.

Boeing’s shares are down fractionally in early trading, at $74.50 in a 52-week range of $66.82 to $78.02.

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