Cursed? Boeing 787 Fire Sends Shares Reeling
An empty Boeing (NYSE:BA) 787 Dreamliner, operated by Ethiopian Airlines, caught fire at London’s Heathrow Airport on Friday. Following last weekend’s 777 jet crash in San Francisco and given previous problems that dogged the Dreamliner earlier this year, investors were sensitive to this news.
Shares dropped by as much as 6.8 percent during midday trading, the stock’s worst one-day slide in nearly two years. The drop shook the broader market, dragging down the Dow Jones Industrial Average. Boeing fell as low as $99.40 per share before recovering slightly.
The incident remind investors of the lithium-ion battery problems that dominated the 787’s early history. Two battery meltdowns forced regulators in the United States and Japan to temporarily ground the Dreamliner in January. That was the first such grounding in the United States for an entire model since 1979. Ethiopian Airlines, one of eight Dreamliner operators, began putting the planes back in service in April after Boeing made redesigns to the battery system.
Shares have advanced more than 35 percent so far this year, but after the Dreamliner was grounded, shares changed hands at about $73.
Photographs of the tarmac showed the plane close to an airport building and surrounded by fire crews, The Associated Press reported. Arrivals and departures were temporarily suspended on both runways, but no injuries have been reported.
Using Twitter, Boeing officials said it was “aware of the 787 event” in London, and that the company was “working to fully understand and address this.”
“At this point we obviously don’t know what the cause is and how long it will take to rectify the problem, whether [it’s] related to the prior problems with the 787,” D.A. Davidson analyst J.B. Groh told CNBC. “The market reacts to these things pretty violently, especially with something like this, where it’s noteworthy given the prior problems with the [Dreamliner],” he added.
British Airways (BAIRY.PK) is scheduled to take a delivery of the first two of its 24 ordered Dreamliners, and Virgin Atlantic is due to get the first of its 16 planes in September 2014.
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