Stuck Between Life and Death, Will More Than $1 Billion of Boeing's Embarrassing Jets Ever Leave Runway 11-29?

For Boeing investors 2013 was an excellent year as the stock performed very well. However, Its 787 program remains unprofitable, here's one reason why.

Feb 22, 2014 at 10:00AM

Whether you were a Boeing (NYSE:BA) investor, or just a random traveler, the company's game-changing 787 Dreamliner was a headache last year. For investors, the 787 program ran over budget and had product delays that irritated all parties involved. For travelers, a problem with the plane's batteries caused the fleet of aircraft to be shut down for months. The 787 problem extends even further for Boeing, and a little-known runway full of half-dead airplanes is costing the company.

Soaring costs
Once upon a time, as Boeing went about developing the game-changing, fuel-efficient, 787 Dreamliner, the cost was forecast at about $5 billion. According to Kuow.org, and Boeing spokespeople, by the time the Dreamliner project is profitable in 2016, the cost will likely cost north of $25 billion. A little known secret of Boeing's remains visible at its Everett plant in Washington state on runway 11-29.

Boeing
Photo Source: Google maps. Runway 11-29.

It's a runway filled with half-dead Dreamliners that are essentially a black hole for company profits, as the plans have been sitting there for years. According to Kuow.org, based on tax write-offs for the first handful of 787s, people believe the half-dead planes could cost as much as $400 million apiece. That's a chunk of change that adds up quickly, when considering these will never make Boeing money sitting half-completed on runway 11-29. While investors would be quick to point out the production price per airplane is much lowered now, these aircraft were built early in Boeing's project timeline at a higher cost.

The airplanes have been dubbed the "Terrible Teens" because some have been sitting on the runway for more than 1,300 days, and the problem looks to remain idle, as Boeing isn't planning on moving the Dreamliners this year. Boeing's priority is now turning a profit on newer, cheaper, and more efficient production -- the company recently ramped up production rates of its Dreamliner program to 10 per month.

The ghost planes on runway 11-29 are part of the reason one of Boeing's most important projects remains unprofitable, but it extends further. According to Kuow.org, Boeing has said there are more 787s than just the ones found on runway 11-29, although no specific figures were given.

Looking ahead
This is a transitional year for Boeing as the company's backlog of airplane orders has soared to a record value of $441 billion. That amount of secured revenue is a huge cushion for investors, and one that few companies on the planet can match. However, 2014 is the year that Boeing needs to begin ramping up production on its many product lines, including the 787 Dreamliner, to cash in on its massive backlog. As that happens, look for the company to become more profitable. While 2014 may not be the year Boeing fixes the rarely discussed ghost planes on runway 11-29, it may be the year that investors turn up the heat asking for the company to take care of the issue rather than deferring costs over multiple quarters. At a whopping estimated cost of $400 million per airplane stuck between life and death on runway 11-29, the cost could easily reach $2 billion or more. However, in reality for Boeing investors, that isn't enough to move the needle on its business success and is really just more embarrassing than it is costly. 

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Daniel Miller and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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