Boeing shares open higher after steep 2-day drop
Boeing shares open higher after 2-day drop knocks $2.7 billion off aircraft maker's market cap
NEW YORK (AP) -- Boeing opened higher in Wednesday trading, cutting short a steep decline this week after two of its 787s suffered technical problems that received intense media coverage.
Boeing confirmed that the Monday fire aboard a Japan Airlines plane appeared to have started in a battery pack for the plane's auxiliary power unit. The National Transportation Safety Board described the fire damage to the battery as "severe."
Investors may have been unnerved by the fire because the 787, which entered commercial service in November 2011, has encountered a series of electrical problems.
And one day later, another Japan Airlines 787 at Logan had to be towed back to the gate after spilling 40 gallons of jet fuel.
Shares dropped 4.6 percent Monday and Tuesday, knocking $2.7 billion off Boeing's market value, which now stands at about $56 billion. They rose $1.28, or 1.7 percent, to $75.39 in early Wednesday trading.
Boeing has a lot riding on the 787. The long-range jet promises a smoother travel experience and is 20 percent more fuel efficient than older models. After years of delays, Boeing has now delivered 49 of the planes, with almost 800 more on order.
Last month, a United Airlines 787 flying from Houston to Newark, N.J., diverted to New Orleans because of an electrical problem with a power distribution panel. Last week, United said it would delay the start of 787 flights from Houston to Lagos, Nigeria because it wanted to "improve the reliability of the aircraft."
So far, most analysts are sticking with the company, waiting to see the conclusion of the investigation into the battery fire. Federal safety investigators opened a formal investigation into the incident on Tuesday.
Jason Gursky, analyst with Citi Investment Research, wrote "these incidents — while unfortunately clumped together — do not signal grave issues with the long-term prospects for this aircraft, in our view." His price target for Boeing shares is $85.
However, Carter Leake, an analyst at BB&T, was more concerned about the latest 787 issue, and downgraded Boeing stock to "Hold" from "Buy" on Tuesday.