Dallas, Texas 07/24/2014 (FINANCIALSTRENDS) – The Boeing Company (NYSE:BA) reported on Wednesday that it has had to take pre-tax charges to the tune of $425 million as part of the earnings in second quarter. The issue was with respect to the wiring of the refuel tankers, for use in the Air Force.
Back in 2011, the competition for this tanker project was high with Boeing having to fight hard against Airbus quotes for the same. The result was steep driving down of the prices and Boeing was expected to see profits only after it had commenced full production.
However, in the second quarter of this fiscal, The Boeing Company (NYSE:BA) has been tied down by wiring issues in the refuelling tanks. Despite clarifications and assertions by Boeing executives that the wiring issue is now sorted and effectively handled, doubts remain.
Additionally, the concern now for investors is the fact that there may be more problems to follow. Currently the rewiring has proved to be costly, as nearly $50 billion has been spent thus far. The additional expenditure most definitely had an impact on the stocks of the airliner, with Wednesday being a dull day as share prices dropped by 2.3% to $126.71 a share.
Besides, coverage by analysts too has continued to impact the trends.
RBC Capital Markets, analyst Robert Stallard has highlighted the likely problems the airliner would have to face in the near future and that it was “worrying that it is booking a charge of this magnitude at a relatively early stage in this long-term program, particularly given recent assurances from management that everything was going to plan.”
The Boeing Company (NYSE:BA) trysts with the tanker named KC -46A will now take longer as the company claimed that it now has ‘well defined and understood’ the technical issue and will reroute along with making manufacturing changes.