Boeing stock value compared to Boeing Executive excessive incentive pay
Analysts of Boeing.
Jefferies analyst Howard A. Rubel estimated that re-working the jet to fix electrical problems could cost anywhere from $250 million to $625 million. Fitch Ratings, said the grounding will hurt Boeing’s profits and cash flow. “Barclays analyst Carter Copeland predicted he grounding will have impact on Boeing’s finances or production.
Boeing will have to pay airlines cash because of the problems, it may also have to offer services to mollify airlines, such as discounted or free pilot training or discounted spare parts, said Carter Leake, an analyst at BB&T who downgraded Boeing quickly after the plane began having trouble.
Those services are worth something to the airline but don’t show up as a cash expense for Boeing, so Boeing will try to use this tactic to hide the true expense to Boeing shareholders.
The latest problems come just as Boeing is in contract talks with its unionized engineers..
The Society of Professional Engineering Employees in Aerospace indicated it would reject Boeing’s offer because the union believes it would put retirement benefits at risk.
“Boeing’s actions reiterate the company’s growing disrespect for the engineers and technical workers who are essential to working issues and restoring confidence in the 787,” the union said.
Because the 787 problems have arisen this late in the process, they could lead authorities to conclude that even tougher testing is needed.
“If the authorities get more stringent and take more time to certify planes, this will affect Boeing bottom line,” said Sandy Morris, an aerospace analyst with Jefferies in London.