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Analyst Says Falling Oil Prices Could Dampen Demand For Boeing's New Aircraft

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Elaine Thompson
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AP Photo
A Boeing 787-9 taxis before taking off on a first flight of the new aircraft Tuesday, Sept. 17, 2013, at Paine Field in Everett, Washington.

Boeing reported that earnings and revenue climbed in its most recent quarter. But the stock fell on worries about when the 787 Dreamliner program will become profitable. One analyst says there’s another concern for investors: the recent drop in oil prices.

Crude oil has dropped to its lowest price in more than two years. Boeing has staked its future on a bet that airlines will want more fuel-efficient planes like the 787 Dreamliner. The company says the Dreamliner uses 20 percent less fuel than other planes its size. Despite analysts’ worries, CEO Jim McNerney says he doesn’t expect demand to be affected by the recent drop in oil.

“The price of oil could still fall a long way before our planes are anything other than compelling economically,” McNerney said.

Morningstar analyst Neal Dihora says demand has been so strong for new planes lately that lower oil prices are not catastrophic. But he says if they stay low long enough, airlines will reevaluate whether it makes sense to replace current aircraft with more energy-efficient ones.

“You have to admit that lower oil is not good for somebody selling fuel-efficient airplanes,” Dihora said.

Dihora says more airlines, especially ones that are struggling, may hold off on going through with plane purchases if they’re no longer facing high fuel prices. Boeing says that hasn’t been happening.