Boeing Seals $6.5 Billion Order, and Things Could Get Worse for General Motors

If you've been following General Motors' recall bonanza over the past six weeks, it appears things could get even worse.

Apr 2, 2014 at 3:00PM

The Dow Jones Industrial Average (DJINDICES:^DJI) is searching for a direction today, having moved less than 0.1% as of 2:45 p.m. EDT. Private-sector payrolls in America increased by 191,000 in March, which was slightly short of expectations but still an improvement from February's level.

"The job market is coming out from its deep winter slumber," said Mark Zandi of Moody's Analytics. "Job gains are consistent with the pace prior to the brutal winter."

Investors will be looking for Friday's Bureau of Labor Statistics' March jobs report to confirm that conditions in the labor market have improved after the harsh winter weather subsided. With that in mind, here are some major companies making headlines today.


The 737 MAX 8 and MAX 9. Source: Boeing.

Aviation juggernaut Boeing (NYSE:BA) and Air Canada finalized an order yesterday for 33 737 MAX 8s and 28 737 MAX 9s. The order also has 18 options and 30 rights to purchase additional 737 MAX aircraft, according to Boeing. At list prices, Air Canada's order is valued at $6.5 billion.

Boeing's 737 MAX is designed to improve fleet fuel efficiency, which continues to grow as a percentage of airline costs. The 737 MAX is also designed to reduce carbon emissions by 14% and reduce operational noise footprint by 40% compared to today's aircraft, according to Boeing.

"Projected fuel and maintenance cost improvements of more than 20 percent per seat will generate an estimated CASM reduction of approximately 10 percent compared to our existing narrow-body fleet," said Calin Rovinescu, president and CEO of Air Canada. "In addition, the 737 MAX offers improvements to the environment, making this the best choice for Air Canada."

Outside of the Dow, the flurry of bad press for America's largest automaker, General Motors (NYSE:GM), could get worse in the coming weeks after senators hinted at a cover-up regarding one of its recent recalls.

"I think we need to hear from people who had the key positions at GM who perhaps had knowledge of this," said Sen. Dan Coats (R-Ind.) during a hearing of the Senate Commerce Committee's consumer protection panel, according to Automotive News.

Earlier this week General Motors announced another recall of more than 1.3 million vehicles that can apparently experience a sudden loss of electric power. If you haven't been keeping track of this recall debacle over the past six weeks, that brings the total to eight separate recalls covering nearly 6 million vehicles.

This gives current and potential GM investors plenty to chew on before the company announces its first-quarter results. GM originally expected to add a charge of $300 million to its first-quarter results, but that has now ballooned to about $750 million. That charge only accounts for recall-associated charges and doesn't include possible lawsuits or the damage done to the company's already battered brand image. 

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Daniel Miller owns shares of General Motors. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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