Aerospace giant The Boeing Company (BA - Free Report) received the necessary approval from the U.S. Federal Aviation Administration (FAA) to test the 787 battery. Boeing 787 airplanes were grounded after two battery overheating incidents in Jan 2013. Boeing is trying hard to find a solution to battery overheating and the successful completion of the new set of testing will likely pave the way for FAA's approval leading to the resumption of commercial operation.
Boeing has made a three-layer improvement plan to overcome the overheating problems of 787 batteries. First, the new design of the battery will prevent faults from occurring and isolate any that do; second, the enhanced operating and testing processes will ensure highest levels of quality and performance of the battery and its components and finally, though unlikely, even if any battery failure reoccurs, the new enclosure system will keep any level of battery overheating from affecting the airplane.
The 787 Dreamliner is the first passenger jetliner manufactured mostly of lightweight and environmentally friendly composite material. This is a welcome change from traditional materials like aluminum and titanium. The new airplane was preferred by airline companies as it also promises fuel efficiency, consuming 20% less fuel than the airplanes of its peers.
This 787 model forms an integral part of Boeing’s commercial airplane revenue target for 2013, which is in the range of $51 billion to $53 billion. Commercial Airplanes' 2013 deliveries are expected to be between 635 and 645 airplanes. This includes around 60 units of 787 deliveries taking into account the planned increase in build rate and additional production flow time provided throughout factory and across supply chain as the company introduces the new 787-9.
Currently, Boeing has 890 net orders for the 787. Up through Mar 5, 2013, the company received orders for 42 airplanes. To cope with the ever increasing backlog of 787s, Boeing has made plans to increase its current production rate of 5 per month to 10 per month by the end of this year.
Although Boeing has received regulatory nod to carry on test of new batteries, we are still uncertain about the outcome. Consistent order booking of other variants of commercial airplanes is nevertheless helping the company.
Recently, Boeing received orders worth $4 billion for its commercial airplanes. The orders include 17 airplanes of the 737 model. United Continental Holdings Inc. (UAL - Free Report) ordered eight 737-900ERs, Qantas ordered five aircrafts and leasing company GECAS ordered for another four airplanes. On the other hand, 10 big 777 airplanes have been ordered by Air Lease Corp. (AL - Free Report) .
Apart from the commercial airspace, Boeing is also one of the leading players in the U.S. Aerospace and Defense sector. The uncertainty prevailing over the U.S. defense budget and sequestration might impact the defense revenue of the company. Boeing and its aerospace peer Lockheed Martin Corporation (LMT - Free Report) currently retain a Zacks Rank # 2 (Buy).