Boeing 787 Dreamliner Fire Not Battery Related, Shares Rebound

Joe Goldman |

Boeing (BA) shares recovered most of Friday’s losses after the U.K.’s Air Accident Investigation Branch (AAIB) announced that the fire aboard a 787 Dreamliner in London was unlikely caused by the aircraft’s battery.

Last Friday, Boeing shares plunged around nine percent after a small fire ignited aboard an empty 787 Dreamliner at Heathrow Airport. Because the 787 has a long history of battery fires and mechanical malfunctions, fears of fleet grounding and production stoppages reemerged. The AAIB, however, relieved these worries in a press release over the weekend.

“It is clear that this heat damage is remote from the area in which the aircraft main and APU (Auxiliary Power Unit) batteries are located, and, at this stage, there is no evidence of a direct causal relationship,” said the statement.

In fact, Boeing may be entirely off the hook for damages. According to MarketWatch, investigators are looking at the emergency transmitter, a device made by Honeywell (HON), as the possible source of the fire.

Even if Boeing's lithium-ion battery had caused the fire, investors have to wonder whether the stock has become impervious to the 787’s mechanical issues and publicity woes. The entire 787 Dreamliner fleet was grounded on January 16, 2013 after a battery-caused fire, and shares are up 37 percent since that date. There seems to be a raging bull market in aerospace, and investors are using every opportunity to snag shares at a discount.

Boeing shares were up 3.5 percent to $105.44 on Monday, but still trade below Friday's all-time high of $108.15. Meanwhile, Honeywell shares traded flat after paring earlier losses.

Click here for a full timeline of the 787’s technical issues.

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Companies

Symbol Name Price Change % Volume
APRWF Atlantic Pwr Pfd Eq Pfd 1 10.75 0.00 0.00 0
BA Boeing Company (The) 131.57 1.00 0.77 1,162,714
HON Honeywell International Inc. 116.08 0.14 0.12 2,574,686

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