Boeing Stays Aloft Despite Troubles with 787

Last week, on the same day the FAA officially ungrounded Boeing’s 787 Dreamliner, American Airlines employees were whooping it up in an aircraft hangar at nearby Boeing Field.

It had nothing to do with the Dreamliner.

Executives and select employees cheered the official delivery of a different plane, a new 777-300ER aircraft. American is the first U.S. carrier to own the dual-aisle plane. Festivities included the requisite ribbon-cutting, speeches by executives and applause from the 100 or so workers.

In other words, for Chicago-based Boeing Co. – embroiled in a three-month public relations fiasco over batteries that overheated aboard its highly touted 787 Dreamliner – it was business as usual. Another plane out the door.

After 100 days of breathless and near-daily news reports around the world about grounded Boeing 787 Dreamliners, casual observers might conclude that Boeing, an aviation and defense behemoth, was on the ropes financially, and that battery-overheating problems with its new airplane were among the gravest in aviation history.

Not exactly.

The number of passengers killed on Dreamliners is zero, as is the number of injuries. The problematic batteries don’t even have anything to do with the plane’s basic ability to fly.

And despite the attention, the grounded plane had little impact on Americans. Chicago-based United Airlines is the only U.S. carrier to have 787s, and it has only six in a fleet of 700 planes.

Perhaps most telling about the impact of the Dreamliner battery crisis is its effect on Boeing as a company. “We haven’t talked specifics on the numbers, but it’s minor in comparison to the overall results,” Boeing Chief Financial Officer Greg Smith said last week, in talking about the battery problem’s effect on first-quarter earnings, which surpassed Wall Street expectations.

So far, the battery episode doesn’t seem to have damaged profits of the world’s largest aircraft-maker. Indeed, it expects to generate the same company-wide profit for 2013 that it announced before the battery crisis, and to deliver all of this year’s scheduled Dreamliners, 25 of which are completed but parked around Boeing factories because deliveries were halted.

Airlines haven’t soured on the company. Boeing’s new orders are strong. Not a single customer canceled an order for a Dreamliner, which lists for $207 million, as a result of the battery problems.

And investors seem to believe in the company. Boeing’s stock price closed Friday at a five-year high before dropping slightly this week.

F. Carter Leake, an aerospace analyst with BB&T Capital Markets, issued a report last week, titled, “The 787 Crisis: Like it Never Happened at All,” saying Boeing’s stellar quarter had him “eating a large plate of crow” because of his formerly negative view of the company based on the battery problems.

“Not only did Boeing resolve all issues with the FAA in short order, but it did so at rounding error cost,” Leake wrote, citing Boeing’s success with other airplane lines. “We are returning to our pre-787 crisis thesis that posited that Boeing’s current and planned mix of platforms is arguably the best in its history.”

All that’s not to say that overheating batteries weren’t a serious problem; Boeing officials are careful not to pooh-pooh it, and for three months, the company poured resources into addressing the problem batteries.

“The grounding of the fleet was a very significant event for Boeing and for our customers,” said Mike Sinnett, chief project engineer for the 787. “We take it very, very seriously.”

But experts say the saga will be remembered in the long-term only as minor turbulence in launching a highly successful new plane model. “Five years from now, this will all be forgotten,” said Aaron Gellman, an aviation expert at Northwestern University.

Henry Harteveldt, a travel analyst with Hudson Crossing, said he was surprised by the intense interest in the 787’s battery.

“No planes crashed, no one was hurt, no one died,” he said. “I don’t think the 787 will have a long-lasting black mark or stigma over it.”

There’s no denying the Dreamliner has been problem-plagued, starting with delivering the first plane more than three years late because of design and production delays. And then there were the “teething problems,” the fuel leaks and other minor mishaps that are common in new plane models.

But then, in January, the lithium-ion battery problems surfaced.

The Federal Aviation Administration grounded Dreamliners in the U.S. after overheating battery incidents on two Japanese planes, one in Boston and one in Japan. The ban was the first since the McDonnell Douglas DC-10 had its airworthiness certificate suspended after a deadly 1979 crash soon after takeoff from Chicago’s O’Hare International Airport.

Aviation regulators around the world followed the FAA in grounding Dreamliners. Boeing halted deliveries of the plane. Investigations ensued, by Boeing, the FAA and the National Transportation Safety Board.

In the end, Boeing failed to find a root cause for the overheating lithium-ion batteries. Instead, the company devised a system that it said should make it impossible for a fire to start.

Boeing developed retrofit kits that are being applied to Dreamliners around the world as aviation regulators approve the fix and lift their bans on the plane. The FAA officially ungrounded the 787 on Friday.

Boeing said it expected to resume deliveries early this month, and finish retrofitting the 50 customer planes by mid-May.