-Frost & Sullivan: Boeing will look to rebound from grounding of fleet 787-

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Jan 22, 2013, 01:44 ET

KUALA LUMPUR, Malaysia, Jan. 22, 2013 /PRNewswire/ -- The recent series of issues plaguing the 'dreamliner' or the '787' has led the Federal Aviation Administration (FAA) to intervene, grounding all US-registered Boeing 787s until the mega airliner company, Boeing, demonstrates the lithium-ion polymer batteries are functionally safe.

Although the company has had a slew of incidents, Frost & Sullivan predicts the latest mishaps to have temporary ramifications. Amidst the company's bad reputation, Boeing is still noted to have had significant successful history of aircraft development and has experience in management of numerous programs as complex as the 787 in the past.

According to Sagar Shahane, Consultant, Asia Pacific Aerospace & Defence Practice, Frost & Sullivan, "The Boeing 787 has especially undergone a very rigorous testing regime and the chances of a critical fault with the carrier being entirely undetected remains immensely small."

He added, "However, some short term implications are still expected with any mishap, especially one of such a high profile nature."

These implications include damages to airlines due to more cancellations of flights, erosion of market cap as a result of flagging confidence and injection of expenditure into the 787 program in attempt to retain and win back airline and passenger confidence.

"Although there are various valid safety concerns and considerations, airlines are highly unlikely to resort to drastic measures of cancelling the 787 orders or contemplate other alternatives," says Shahane.

The closest alternative, the Airbus 350-800 has similar specifications when comparing range, capacity and technology, and is a viable alternative airlines are likely to look at if they opt to.

However, Frost & Sullivan predicts this is very unlikely as there are difficulties securing slots for the alternative (A350) to be in line with future fleet plan. Moreover, there are uncertainty issues as with the 787, the A350 is a similar plane model with newer technology and can have the same functional problems faced by the 787.

Another important factor is all aircraft development programs go through teething issues. Technical problems and issues of varying natures commonly arise and it is likely Boeing will develop strategies to overcome these issues and manage customer expectations.

Shahane added, "While the extent of the issue will be revealed in time to come, ultimately, the future of Boeing will be determined by the speed of response and effort Boeing inculcates to win back consumer confidence."

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SOURCE Frost & Sullivan