Boeing (BA) has demonstrated that it cannot get its big planes to market on time. It has delayed its 787 Dreamliner three times. Customers are angry and may actually ask for compensation. The problems have helped drop Boeing’s shares from a 52-week high of $107.83 to their current level of $74.79.
The stock price may be about to get worse. The global turmoil in the airline industry is making carriers poor and driving many of them in the direction of Chapter 11. Boeing should have turned up the heat and gotten those 787s out the door. A number of buyers may be going away.
Boeing and rival Airbus could be in for cancellation orders coming from all over the world, starting with US carriers who are high on gas prices and low on cash.
According to The Wall Street Journal, "The combined value of the orders for Airbus and Boeing planes exceeds $500 billion at list prices, so large-scale cancellations and deferrals could easily amount to tens of billions of dollars and affect suppliers of engines and other parts in addition to the jet makers."
If cancellations do become widespread, Boeing could head back toward $50, where it traded in early 2005.
Douglas A. McIntyre
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