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Boeing's Jinxed Dreamliner: Is This the Edsel of the Air?
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Is Boeing’s vaunted 787 — the so-called Dreamliner — the Edsel of the air? Probably not, but the plane is under a serious cloud and so is its maker.

The recent run of 787 emergencies may well be mere teething problems, as Boeing executives insist, but in the era of the 24-hour news cycle, the damage to the plane’s reputation could be significant. One indication is that already as of last night Boeing’s stock had been outperformed by nearly 10 percent in the last month by that of EADS, the European maker of Airbus planes. The divergence is likely to be further exacerbated when New York opens later today. In the longer run, much depends on the outcome of Boeing’s analysis of the problems and how other operators, notably United, react.

On the plus side, the public’s memory is short, as Airbus has discovered to its advantage with its huge A380 jumbo. After one of the plane’s Rolls-Royce engines suffered an alarming failure in 2010 on a Qantas flight from London to Sydney, the crew had to make an emergency landing in Indonesia. This episode and a similar one last November involving the Emirates airline seem to have done no permanent damage to the plane’s reputation. The Qantas emergency moreover was more frightening than anything the 787 seems to have suffered. That said, Airbus has been luckier than Boeing in that it has experienced nothing like the sudden concatenation of events that have dogged the 787 in the last month.

At the center of the current crisis is a decision last night by Japan’s ANA and JAL — the first and second operators of the plane — to ground their 787 fleets. All this is the more troubling because Boeing has long enjoyed a particularly close relationship with the Japanese. This reflects a larger government-led policy by Japan to favor Boeing strongly over Airbus in aircraft purchases. In return Boeing has sourced an ever increasing share of its manufactured content from Japanese corporations like Mitsubishi Heavy Industries, Toray, and Panasonic. Assuming that the Boeing-Japan relationship is still close (and nothing has emerged in public to suggest otherwise), it can be assumed that the Japanese have not grounded their planes without carefully mulling the consequences for Boeing — and for Boeing’s Japan-based suppliers.

(Republished from Forbes by permission of author or representative)
• Category: Economics • Tags: Boeing 
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