According to a report published by Hindustan Times, the CEOs of The Boeing Co. (BA) and Airbus SE (EADSF) have urged the U.S. government to postpone the launch of new 5G wireless services.
In a letter to U.S. Transport Secretary Pete Buttigieg, the executives said, “5G interference could adversely affect the ability of aircraft to safely operate,” and the deployment of C-Band spectrum 5G wireless could have “an enormous negative impact on the aviation industry.”
An Airbus spokesperson said, “Airbus and Boeing have been working with other aviation industry stakeholders in the U.S. to understand potential 5G interference with radio altimeters.”
Radio altimeters are devices used to measure the distance between a plane and the ground.
The letter comes after the aviation industry and Federal Aviation Administration (FAA) expressed concerns about how 5G wireless services could interfere with sensitive aircraft electronics.
Earlier in December, the FAA issued two airworthiness directives to collect information and provide a framework to avoid “potential effects (of 5G) on aviation safety equipment.”
According to the directives, airplanes and helicopters cannot rely on radio altimeters if operations of 5G C-Band wireless broadband interfere with their functioning.
The FAA is working with wireless companies and the government’s communications agency and said that it has “made progress toward safely implementing the 5G expansion.”
Meanwhile, the U.S. wireless industry group CTIA said there is not a “single report of 5G causing harmful interference with air traffic of any kind.”
Illinois-based Boeing designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles. The company also provides leasing and product support services.
Boeing shares closed nearly 6% higher at $199.52 on Tuesday and were trading 0.3% higher in the pre-market session on Wednesday at the time of writing.
Wall Street’s Take
Recently, Bank of America Securities analyst Ronald Epstein reiterated a Hold rating on the stock and reduced the price target from $245 to $220 (10.3% upside potential).
The analyst said, “While the manufacturing issues do not appear to be the safety of flight risks (as the in-service fleet has not been parked), we view the continued manufacturing issues in a quite mature stage of the 787 program as a red flag and are concerned about what this could imply about Boeing’s engineering health and timely quality control.”
“Boeing faces several near-term headwinds, including difficulty in ramping production back up with increased quality oversight, lack of employee expertise in re-worked tasks, reduced commonality of fixes to the 787 parked fleet and potential fixes for the in-service fleet,” Epstein added.
Overall, the stock has a Strong Buy consensus rating based on 12 Buys and 4 Holds. The average Boeing price target of $268.71 implies 34.7% upside potential. Shares have lost 18.2% over the past six months.
TipRanks data shows that financial blogger opinions are 68% Bullish on Boeing, compared to the sector average of 70%.