Boeing Bargains With Delta for a Billion-Dollar Deal

BoeingAlready juggling tenuous contract negotiations with a labor union and the ongoing investigation into lithium-ion batteries aboard its 787 Dreamliner, Boeing (NYSE:BA) is reportedly engaged in talks with Delta (NYSE:DAL) over an order for as many as 30 aircraft.

People familiar with the matter told Bloomberg that as part of a fleet-overhaul initiative, Delta, the world’s second-largest airline, is evaluating whether it wants to replace some of its 50-seat aircraft with the Boeing 737 or the Airbus A320. Both planes are a rung below the Dreamliner in the hierarchy of aircraft, but have been the backbone of the industry for years.

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Estimates put the size of the deal at about $1 billion, a deep discount to the nearly $3 billion listed retail value for an order this large. Boeing may be willing to offer steeper discounts in light of all the bad mojo the company has accumulated over the past few weeks because of the Dreamliner battery fiasco. In 2012, for the first time in a decade, Boeing out-delivered its European rival. The company highlighted its victory with an initiative to double its Dreamliner production capacity, but with fleets grounded for a week already, Boeing’s ambitions have been complicated…

Boeing is doing damage control on a number of fronts. The publicity of the battery mishaps has added a dollop of volatility to the company’s stock. Some analysts quickly turned into bears, while others used the selling pressure as a buying opportunity.

The Federal Aviation Administration, which was forced to ground U.S. Dreamliners, still openly supports the aircraft. Carriers like United Air Lines (NYSE:UAL), which was forced to ground its six Dreamliners, have also reiterated their commitment to the plane and the company. A consensus has built that while Boeing is responsible, it’s not necessarily to blame. Attention has turned to the FAA’s certification process, and the companies that made the battery and electrical systems involved.

The battery itself was made by a Japanese company named Yuasa Corp. As part of what has become a global investigation into the issue, the Japanese transport ministry is searching the company’s headquarters in Kyoto to see if they can identify any problems with the manufacturing process. Investigators are taking CT scans of each cell in the battery that caught fire at Logan Airport to see if they can determine what happened.

Boeing’s stock has shown some signs of recovery over the past week, but is still off over 3.5 percent since the start of the year.

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