Monday, April 22, 2013
Investors who stood by Boeing during its 787 crisis have been rewarded.
Things looked bad three months ago. Boeing’s flagship plane was grounded worldwide because no one could explain the smoldering batteries on two different planes. Deliveries of the 787 to customers had stopped. No one knew how much the whole mess would cost. Plus, there was a chance engineers could strike, halting production.
Some investors bailed out, spooked by the latest snag with a plane considered to be a key to Boeing’s future. Others were confident that Boeing Co. would quickly fix the battery problem and raved about its long-term prospects.
“Over time, when investors are terrified, you’re usually going to be able to find some very good buying opportunities,” said Don Peters, portfolio manager for T. Rowe Price’s tax efficient equity fund.
On Friday, federal regulators approved Boeing’s battery fix, clearing the way for the plane to fly again, although the timing remained uncertain. The shares rose 2 percent to close at $87.96 on Friday, and are now up almost 17 percent for the year.
The stock has outpaced the gains that brought new record highs for the Dow Jones industrial average and the Standard & Poor’s 500 index. Anyone who bought 100 Boeing shares at the January low of $73.65 is sitting on a gain of $1,431, or 19 percent.
In January, T. Rowe Price analyst David Rowlett concluded that Boeing’s 787 problem was serious, but manageable.
He said the hardest part for Boeing with the 787 had been the years of production delays before the plane finally went into service in late 2011. At the time of the grounding, only 50 787s had been delivered, limiting any compensation owed to customers for the planes being out of service.