Boeing (BA) is struggling to persuade air safety regulators to inspect its 787 Dreamliner. The Wall Street Journal reports that deliveries for the aircraft could remain halted until October, amid the escalating inspection impasse. BA shares fell 1.20% to close at $218.17 on September 3.
Boeing is an American aerospace company that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunication equipment, and missiles.
Deliveries of the 787 Dreamliner have been halted for almost a year as the Federal Aviation Administration (FAA) started taking a deeper look into the aircraft manufacturing process. Last month, Boeing’s quality assurance specialists told their counterparts at the FAA that three aircraft were representative of how the 106 completed aircraft, which are pending delivery, were developed.
The move was part of Boeing’s push to persuade the agency to approve an inspection method that would allow the company to make deliveries. The inspection push failed on one of Boeing Engineers, a representative of the FAA, insisting that the trio did not reflect how the rest of the undelivered airplanes were made. (See Boeing stock charts on TipRanks)
The delays have already caused some customers to walk away from previous agreements. The Wall Street Journal also reports that some customers have opted to negotiate for concessions. In addition, the delays allow aircraft buyers to walk away without the risk of financial penalties. Notably, Avolon Holdings has canceled two of its Dreamliner orders.
The regulatory impasse on the inspection front has affected key revenue streams for Boeing. The aircraft maker has about one hundred 787 Dreamliner jets in its inventory, which cannot be shipped to customers, denying it about $25 billion in revenues.
Recently Susquehanna analyst Charles Minervino reiterated a Buy rating on the stock with a $300 price target, implying 37.51% upside potential to current levels.
The analyst has revised his Boeing 787 delivery assumptions, given the inspection standoff. However, the analyst expects the FAA to approve proposed remedies before year-end.
Consensus among analysts is a Moderate Buy based on 8 Buys and 7 Holds. The average Boeing price target of $274.87 implies 25.99% upside potential to current levels.
BA scores a 6 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.
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