Bloomberg News

Dreamliner Customers Back New Jet After Fire Scrutiny

January 09, 2013

Boeing 787 Customers Back New Jet After Fire Heightens Scrutiny

A Japan Airlines Co. (JAL) Boeing Co. 787 Dreamliner aircraft during a media preview at Narita Airport in Narita City, Chiba Prefecture, Japan. Photographer: Kiyoshi Ota/Bloomberg

Qatar Airways Ltd., one of the biggest customers for Boeing (BA:US) Co.’s Dreamliner, said heightened scrutiny of the model after a plane caught fire at the Boston airport won’t damp the carrier’s purchase plans.

“We will have these problems,” Qatar Chief Executive Officer Akbar al Baker, known to publicly slam plane manufacturers including Boeing for performances deemed sub-par, told reporters in Doha today. “We’ve had no other technical issues. There will be small teething problems.”

This is a crucial year for the 787 as Chicago-based Boeing increases deliveries and production, trying to get out from under the weight of seven delays to the jet’s introduction that spanned more than three years. Qatar still has about 25 unfilled orders for the 787 and al Baker has said he wants to order a larger version of the plane if Boeing offers it.

The fire, spotted Jan. 7 on a Japan Airlines (9201) Co. plane after passengers disembarked from a flight that began in Tokyo, and a fuel leak that delayed another Dreamliner at the same airport are the latest image setbacks to plague the world’s first jet with a fuselage made chiefly of composite materials. The Dreamliner entered commercial service in late 2011.

Boeing, which said yesterday it has “complete confidence” in the new model, is set to double production of the 787 this year to help fill remaining orders for about 800. The planemaker has delivered about 50 of the jets to eight customers: All Nippon Airways Co., Japan Airlines, Air India Ltd., Ethiopian Airlines, Chile’s LAN Airlines, LOT Polish Airlines SA, United Continental Holdings Inc. and Qatar Airways.

‘Operating Smoothly’

Air India, which received its sixth Dreamliner on Jan. 7, said they are “operating smoothly,” G. Prasada Rao, a spokesman for the carrier, said in New Delhi. Boeing has agreed to modify the electrical system on one of the planes by March after providing an “interim solution” to a fault detected in September, he said.

“We have complete confidence in the 787 and vow to take care of any issues our customers are experiencing,” Randy Tinseth, Boeing’s marketing chief, said in a blog post, adding that the model has flown more than 50,000 hours.

“Unfortunately the aircraft is known now for its problems, not for the performance it delivers and the enhanced safety features,” said Michel Merluzeau, an analyst with G2 Solutions in Kirkland, Washington.

A day after the fire, an open fuel valve caused kerosene to leak from another Japan Airlines Dreamliner, delaying takeoff until mechanics could close it, Seiji Takaramoto, a spokesman at Japan Airlines, said by telephone today. About 40 gallons of fuel spilled on the ground at Logan International Airport yesterday, said Matthew Brelis, a spokesman for airport operator Massport.

Valve Check

Japan Airlines, with a fleet of seven 787 Dreamliners, planned to check why the fuel valve wasn’t closed after the plane arrived back in Tokyo, Takaramoto said. The carrier completed checks on batteries after the 787 fire in Boston and no problems were found on the other six aircraft, he said.

The carrier, which returned to the stock market last year after a trip through bankruptcy and a turnaround that included shedding more than a third of workers, fell 0.4 percent to 3,765 yen at close of Tokyo trading. That was the biggest decline since Dec. 28, according to data compiled by Bloomberg.

All Nippon Airways (9202), the first and biggest operator of 787s, canceled a domestic Dreamliner flight today in Japan due to a problem with the computer controlling the brake system, Megumi Tezuka, a spokeswoman at the airline, said by telephone from Tokyo. The airline had several computer problems with the 787 after receiving the first plane in September 2011, which led to the software system being updated last year, she said.

Boeing rose 3.3 percent to $76.55 at 12:27 p.m. in New York, recovering from the stock’s biggest two-day decline in more than seven months.

Flight Safety

GS Yuasa Corp. (6674) made the lithium ion battery on the 787 and is cooperating with the investigation, said Tsutomu Nishijima, a spokesman for the Kyoto, Japan-based company. GS Yuasa wasn’t aware of the reason for the fire, he said. The battery maker fell 0.3 percent to 334 yen in trading today.

“The safety of flight of the aircraft isn’t in question -- I can guarantee this is a much safer airplane than the 767 it’s replacing -- but it shapes the perception of the community and operators and passengers as to what it’s known for right now,” said Merluzeau.

The U.S. National Transportation Safety Board, which is investigating the Jan. 7 fire, said yesterday that the blaze caused “severe” damage near a battery rack in an electronics bay.

“There’s a fine line between a new airplane with glitches and a new airplane with problems, and I’m worried the 787 is crossing the line to problems,” said Henry Harteveldt, an aviation analyst at Hudson Crossing in San Francisco.

United Continental

United Continental inspected all six of its 787s following Jan. 7’s Japan Airlines fire, Mary Ryan, a spokeswoman, said yesterday. She declined to reveal the results and said Chicago- based United continues to work with Boeing on the 787’s reliability.

United canceled both the inbound and outbound Los Angeles- Tokyo flights on Jan. 7 that were supposed to have been flown with a 787 and used a different aircraft, said Ryan, who declined to give a reason for the cancellations. Those flights were due to be flown with a Dreamliner yesterday, she said.

“Nothing that we’ve seen in this case indicates a relationship to any previous 787 power system events, which involved power panel faults elsewhere in the aft electrical equipment bay,” Lori Gunter, a Boeing spokeswoman, said in an e-mailed statement yesterday.

Fuel Leaks

Fuel leaks in November were traced to manufacturing errors, spurring Boeing and the U.S. Federal Aviation Administration to direct inspections and repairs, and Japan Airlines said Dec. 5 it had repaired its 787s.

The NTSB isn’t investigating the leak, which is being reviewed by the FAA. Boeing is aware of the leak and is “working with our customer,” Julie O’Donnell, a company spokeswoman, said yesterday.

“The 787 is a high-profile plane, so it’s getting more media play than if the same thing was happening on a 737,” Michael Derchin, an analyst at CRT Capital Group in Stamford, Connecticut, said in a telephone interview. “Mechanical issues happen all the time, but you don’t hear about them.”

Smoke Detected

In the Jan. 7 incident, a mechanic noticed smoke as he walked through the jet after passengers had disembarked from their flight from Tokyo. The smoke was traced to a fire from the battery used for the auxiliary power unit, Japan Airlines said in a statement.

ANA found no problems with the batteries on its 787s after checking them following a request from Japan’s transport ministry, ANA’s Tezuka said.

An in-flight fire in an avionics bay in 2010 forced the 787 test fleet to be parked for six weeks and added six months to the delay of the plane’s entry into service while engineers rewrote electricity-distribution software. That fire was traced to debris in an electrical panel, which is in the same bay under the cabin as the batteries in question.

Last month, electrical faults forced United and Qatar Airways to ground 787s. The plane is the first commercial airliner made chiefly of composite materials, instead of aluminum, and with an all-electric power system that uses five times as much electricity as other, similar jets.

To contact the reporters on this story: Alan Levin in Washington at alevin24@bloomberg.net; Susanna Ray in Seattle at sray7@bloomberg.net; Chris Cooper in Tokyo at ccooper1@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Ed Dufner at edufner@bloomberg.net


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