The slow progress of investigations into battery problems on Boeing Co's 787 Dreamliner jets suggest the new plane could be grounded for months, raising fears that the financial hit to Boeing will be greater than had been initially predicted.
Wall Street had been working on the assumption that safety inspectors would find the root cause of two battery incidents in the United States and Japan within weeks and Boeing would implement a speedy fix costing no more than a few hundred million dollars.
But on Thursday, the head of the US National Transportation Safety Board said it was only "early" in its investigation of a fire on a Japan Airlines Co Ltd jet in Boston on Jan. 7, while Japanese aviation authorities appear no closer to resolving a battery problem that caused an emergency landing of a domestic All Nippon Airways Co Ltd flight last week.
"Saying we are in the early stages of the investigation sent a resounding message to those who thought this was a quick fix," said Carter Leake, aerospace analyst at BB&T Capital Markets.
"If it comes out that ultimately it's a six-month issue or a nine-month issue, everything changes. All of this optimism and all of this costing assumption, starts to become bigger numbers. Once you get past six months, you have to consider cancellations."
Investors do not appear to be in a panic yet. Boeing shares are down only about 2.5 percent since the 787 was grounded worldwide following the emergency landing in Japan on Jan. 16.
"Wall Street reaction shows confidence in Boeing's ability to solve the 787 problem," said Michel Merluzeau, managing partner at G2 Solutions, an aerospace and defense consulting firm in Kirkland, Washington.
Boeing does make four other kinds of jets, including the best-selling 737, and the company earns 40 percent of its revenue from its defense arm.
Still, the world's biggest planemaker is producing 787s, but not delivering any, a situation that could stretch the company financially and test investors' faith.
"One of our big concerns is that this investigation continues to drag on, and it looks like it may be more than just the battery overheating itself," said Russell Solomon, an analyst at Moody's Investors Service. "You start getting into three, six months out and it has a bigger impact and my guess is that they (Boeing) would have to potentially cut the production rate."
BREAKING DOWN THE COST
Besides the actual cost of fixing the 50 787s