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Boeing's 787-9 Approved for Long Haul Flights

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The cloud of uncertainty that hung over the fate of The Boeing Company’s (BA) 787-9 Dreamliner was finally cleared by the U.S. Federal Aviation Administration ("FAA") and the European Aviation Safety Agency ("EASA"). Both the regulatory bodies gave the go-ahead to the 787-9 aircraft for commercial operation. With this approval Boeing’s 787-9 variant will now be able to fly passengers over the long haul.

This clearance will likely enable the timely delivery of the first 787-9 Dreamliner to its customer Air New Zealand later this month. The 787-9 is the next generation version of the flagship Dreamliner. It comprises an extended fuselage structure that will accommodate more passengers and cargo. Other benefits of the 787-9 include fuel-efficiency and lower emissions.

Boeing worked hard to earn this approval, undertaking rigorous flight test programs. The company received an Amended Type Certificate for the 787-9 which is a stamp of safety and reliability. The certificate further allows Boeing to produce the 787-9 with strict adherence to the sanctioned design.

Past Issues Confronted by the 787

The 787 Dreamliner has been at the forefront of much controversy in the past one year, as numerous technical challenges plagued Boeing’s prized aircraft. There was the overheating incident of the aircraft’s battery that started a fire on a Japan Airlines flight back in Jan 2013.

Following this incident, other airlines like All Nippon Airways, United Airlines and Air India complained of similar issues. This forced the FAA to ban the 787 for three months and cost the company an estimated $600 million for repairing the batteries. To further add to the company’s woes, ice crystal formations cropped up in some of the 787 planes while flying at high altitudes during storms.

787 Makes a Comeback

The glitches however failed to dent the confidence of this aerospace major. The company redesigned the lithium ion batteries by adding a protection around the cells to control overheating, a steel case to prevent any fire from diffusion as well as a tube that vents fumes outside the aircraft. The FAA welcomed the effort and granted approval for the new improved version. Before long the 787s were back in the skies.

More good news poured in for Boeing as the FAA, in May 2014, gave the green signal for additional extended operations (:ETOPS) for the 787 Dreamliner. The move will allow the 787 to operate up to 330 minutes from a landing field, which opened room for additional routes.

To Sum Up

The safety approval from the regulators has thus brought a sigh of relief for Boeing. Having said that, its order book nor its share price has ever shown any signs of weakness on 787 woes. Recently, Boeing sealed an order from All Nippon Airlines for the supply of an additional 14 787 jets.

Going forward, the approval will likely help Boeing secure sizeable orders for the Dreamliner. The worldwide passenger traffic is estimated to grow by 31% in 2017 from the 2012 level as per a media report. This will certainly unlock vast avenues for growth for Boeing’s 787-9 given its enhanced features.

Leading the order race could be China and India followed by North America and Europe. As per a Boeing report, the Middle East will also act as a key market for the 787 where the 777 is also very popular.

The 787 has already gained a lot of interest among international airlines. As of now, 787-9 accounts for 40% of the total 413 787 jets ordered from overseas customer. Boeing’s prospects in the commercial airline industry indeed look upbeat. The 787-9 approval couldn’t have come at a more appropriate moment for the aviation major.

Currently, the company holds a Zacks Rank #3 (Hold). Other better-ranked aerospace players include Zacks Ranked #1 (Strong Buy) Embraer SA (ERJ) as well as Zacks Ranked #2 (Buy) Spirit AeroSystems Holdings, Inc. (SPR) and Leidos Holdings, Inc. (LDOS).

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