Airplane bathrooms are generally not considered points of failure for an entire flight. But aerospace giant Boeing (BA) may be facing just such a condition according to a report from FlyersRights, the largest “passenger rights group” in the United States. This news did not sit well with investors, either, who sent shares down fractionally in Monday afternoon’s trading.
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FlyersRights declared Boeing’s 787 Dreamliner lavatories to be a “dangerous design defect” in a letter co-signed by seven different aviation safety experts. Apparently, reports note, the Federal Aviation Administration (FAA) started setting up a rule that called for airlines to frequently inspect lavatory faucets for leaks, as water could leak into electronic equipment bays that were found under the lavatories themselves.
Indeed, some leaks were found. Most were minor; in one case, carpeting had become slightly damp. The FAA called for redesigned faucet control modules and moisture management devices to be installed by 2030. But this was insufficient for FlyersRights, which believes the FAA was too generous in the timeframe it required for airlines to make the necessary changes.
Good News and Bad
Meanwhile, an early look at Boeing’s fourth quarter earnings report suggests that Boeing is likely to have both good and bad news awaiting investors. The bad news is that Boeing is likely to post a loss in its fourth quarter. The good news, however, will come from 737 production rates, which are on the rise.
There are concerns about the free cash flow outlook, certainly. And Boeing is still having certification issues for two new breeds of 737 MAX, as well as the 777X widebody. But with Boeing poised to ramp up production still further, and get another increase in the FAA’s production cap, a loss in the fourth quarter is likely to be considered a temporary setback.
Is Boeing a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BA stock based on 14 Buys, two Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 43.95% rally in its share price over the past year, the average BA price target of $258.85 per share implies 3.37% upside potential.
