Two Positive Headlines From Boeing This Week
Boeing (NYSE: BA) is getting closer to building Dreamliners and averting a strike. That’s good news for a company desperate to put all of these other issues behind it. In the wise words of YouTube sensation Sweet Brown, “Ain’t nobody got time for that.”
And so, this week a glimmer of light at the end of the Dreamliner tunnel emerged. In a research note, Cowen & Co. analyst Cai von Rumohr predicted that the FAA decision on Boeing’s proposed changes could come as early as next week. That doesn’t mean that the regulating body will approve the changes, but that the chances it will are high.
Among the changes, putting additional insulation between the cells of the aircraft’s batteries and installing a stainless steel box with a venting tube that would prevent any fire from spreading, according to the Chicago Sun Times.
Things may not be moving along nearly as fast as some reports suggest. According to Reuters, test flights aren’t going to happen any time soon. FAA representative Laura Brown said, "Reports that we are close to allowing 787 test flights are completely inaccurate."
Boeing was expecting test flights to resume in early March with the aircraft back in service by the end of the month but Cai von Rumohr said in the research note, ”we think it will allow 787 flights to resume by midyear, with major changes, if any, made later.”
In other Boeing news, Society of Professional Engineering Employees in Aerospace (SPEEA), Boeing’s white-collar engineering union, will concede the last major demand that kept the two sides from reaching an agreement.
The Seattle Times reports that the union will drop the demand for pension benefits for new hires. Tom McCarty, the union’s president said, “I think the pension is dead.” He indicated that when talks resume Wednesday, the union would ask for minor changes.
Boeing’s current offer retains the pension for all current employees but institutes a 401(k) style plan for new hires. An awkward situation developed when the engineers unit voted 54 percent in favor of Boeing’s original contract while the lower paid technical staff voted 52 percent to reject their contract—almost identical to the engineers’ contract.
According to McCarty, the union and Boeing are close to a deal. “I don’t think there are very insurmountable barriers left.”
Boeing has weathered the storm of negative press without any major hit to its stock. It is down only 1.8 percent since the beginning of the year proving that short of any catastrophic news, investors have confidence that these issues are relatively minor.
© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.