The Latest on Boeing's Newest Dreamliner Headache (BA)
On Friday, the aviation industry was rocked when news broke that a Boeing (NYSE: BA) 787 at London’s Heathrow airport had caught fire. The news sent the stock plunging seven percent soon after the news but rebounded finishing the day down 3.6 percent.
The plane, which had sat empty for eight hours prior to the fire, had no passengers on board. Ironically, the Ethiopian Airlines aircraft was reportedly the first to be retrofitted with the battery fix that kept the 787 fleet grounded for three months.
But on Saturday, the British Air Accidents Investigation Branch published a statement that said, “…it is clear that this heat damage is remote from the area in which the aircraft main and APU (Auxiliary Power Unit) batteries are located, and, at this stage, there is no evidence of a direct causal relationship.”
In other words, there is no evidence that this is a battery problem.
That’s a huge sigh of relief for Boeing. While new aircraft often go through technical incidents earlier in their roll out cycle, the rapidly accelerated news cycle of recent years has created a less patient aviation community—including regulators. Boeing has exhausted most of its ability to spin incidents like these as the normal growing pains of a new aircraft.
Related: From Worst to First: Boeing
However, that doesn’t mean that the company is in the clear. The same statement said that investigators had found, “extensive heat damage in the upper portion of the rear fuselage, a complex part of the aircraft.”
Because the company isn’t allowed to release statements regarding the incident until it is cleared by regulating authorities, investors are left to wonder if a coffee pot was left on or there is another extensive issue that will require a costly fix.
Ethiopian Airlines said that it would continue to fly its 787 fleet. Other airlines, including United Airlines (NYSE: UAL) and other foreign carriers have no plans to ground the aircraft until the results of the investigation are known.
Despite the news driven event where investors sold first and collected information later, the stock found support at its 50 day moving average on Friday. It bounced off the level and rallied nearly four percent as pictures indicated the location of the fire.
The stock is up more than 31 percent this year even after Friday’s sell off.
Disclosure: At the time of this writing, Tim Parker had no position in the above mentioned companies.
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.