Bloomberg News

Boeing Faces Last Hurdle for Dreamliner With No-Rush FAA

April 11, 2013

Boeing Faces Last Dreamliner-Takeoff Hurdle With No-Rush FAA

The Federal Aviation Administration is under scrutiny for clearing the 787 in 2007, only to reverse itself after lithium-ion batteries overheated on two jets. Photographer: Andrew Harrer/Bloomberg

Boeing Co. (BA:US)’s effort to get its troubled 787 Dreamliner back in the air is headed for a challenging final hurdle: It needs approval from the U.S. agency that’s already been burned by signing off on the plane’s safety.

The Federal Aviation Administration is under scrutiny for clearing the 787 in 2007, only to reverse itself after lithium- ion batteries overheated on two jets. Transportation Secretary Ray LaHood, whose agency includes the FAA, declared the planes safe days before they were ordered parked. FAA officials will face the National Transportation Safety Board this month to explain their initial decision.

Boeing needs the FAA to end a Jan. 16 grounding order so deliveries can resume from an order book valued at almost $190 billion. Politics, not just safety, will weigh on the agency as it reviews the Dreamliner’s battery redesign and test-flight data, said John McGraw, an aerospace consultant.

“There will have to be some political sensibilities while reviewing this and making sure everybody up the chain and over on the Hill is briefed on what’s being done,” said McGraw, a retired FAA test pilot now based in Stafford, Virginia. “In a normal situation, the secretary would never be involved.”

Boeing has to restart deliveries to pare a backlog of about 800 planes, with a list price starting at $206.8 million. The Chicago-based planemaker has sent teams to Japan, where ANA Holdings Inc. (9202) and Japan Airlines Co. fly almost half of the 49 planes in service, to prepare to install new battery units.

‘Really Fast’

“This will move really fast in terms of being able to get the airplanes back into the air” once the FAA approves the reworked batteries, Boeing Commercial Airplanes President Ray Conner said at a conference last month.

Regulators won’t be rushed, according to LaHood, who said at an April 5 conference in Washington that Boeing must convince the FAA that the battery fix is safe before flights can resume. The 787 may be his last major decision as he prepares to leave after four years on the job.

“We want to get it right,” LaHood said. “We want to make sure that everything’s done correctly. We want to be able to assure the flying public that these planes are safe.”

Boeing completed certification tests that day for the new battery system, flying a 787 with two FAA officials aboard after a series of ground trials.

Meeting Expectations

“We are engaged with the FAA to reply to additional requests and continue dialogue to ensure we have met all of their expectations,” Marc Birtel, a Boeing spokesman, said yesterday in an e-mail response to questions. He declined to comment on the submission of test results, which Boeing said April 5 would be turned in to the agency “in the coming days.”

The FAA isn’t discussing its plans for deciding whether the battery fix is satisfactory beyond saying that it won’t sign off on the Dreamliner’s return to commercial flight until the new battery system is deemed safe, according to Laura Brown, a spokeswoman. She declined to comment on whether the FAA is under any political pressure.

The design and certification of the cells for the Dreamliner in 2007, including the FAA’s role, will be the focus of a two-day NTSB hearing starting April 23. The batteries were certified under “special conditions,” which are rules the FAA creates for new technology.

Today’s Hearing

At another NTSB hearing today, on the use of lithium-ion batteries in transportation, Chairman Debbie Hersman said the cells have an inherent risk, like gasoline in automobiles. Dan Doughty, president of Battery Safety Consulting Inc. in Albuquerque, New Mexico, said those hazards are dwindling as the technology matures.

Next week, the Dreamliner probably will come up when the Senate Commerce, Science and Transportation Committee holds a hearing to discuss the FAA’s progress on safety initiatives.

LaHood, 67, a former seven-term Republican member of the U.S. House of Representatives from Illinois, has played a prominent role since the Dreamliner’s batteries came under scrutiny with a Jan. 7 fire on a Japan Airlines 787.

At a Jan. 11 news conference, he and FAA chief Michael Huerta declared the plane safe. Less than a week afterward, an ANA 787’s battery began smoldering and spewing vapor above Japan, prompting an emergency landing and then the grounding.

LaHood’s involvement in the 787 decision escalates pressure on the FAA, said John Nance, a Seattle-based aviation-safety consultant and former commercial pilot.

‘Intolerable Situation’

“The FAA is totally risk-averse,” Nance said. “This is an intolerable situation.”

Investors have been supportive of Boeing. The shares rose 0.8 percent to $88.53 today in New York, extending their gain to 14 percent since Jan. 4, the last trading day before the fire on the Japan Airlines plane. That topped the 8.7 percent gain for the Standard & Poor’s 500 Index.

One challenge for Boeing is that it’s betting everything on one solution to the battery faults, said Richard Aboulafia, an analyst at consultant Teal Group in Fairfax, Virginia. An FAA rejection would be a major setback, he said.

“Even if there’s only a 5 or 10 percent chance that it won’t satisfy the FAA, that’s a big risk especially if there isn’t a backup plan,” he said.

There’s also a chance that the FAA may shorten the distance that the Dreamliner is able to fly from the nearest airport. The 787 is now cleared for so-called Etops, or extended operations, flights of 180 minutes. Even a temporary reduction would limit the jet’s use on the overseas routes for which it was designed, said Ken Herbert, an Imperial Capital analyst in San Francisco.

Extended Range

“The value of this plane to the airlines goes down significantly without that Etops,” said Herbert, who has an in- line rating on Boeing.

Boeing engineers redesigned the battery to separate and insulate the power cells and replaced the circuitry in the battery charger. It will be enclosed in a stainless-steel box that Boeing says will eliminate the possibility of a fire and is fitted with a tube to vent any liquid or vapors.

“When you can’t find an exact root cause, you go deep into the system and progressively de-risk every system,” said Michel Merluzeau, a consultant at G2 Solutions in Kirkland, Washington.

McGraw, the aerospace consultant and ex-FAA official, said his former agency could sign off on the battery fix within weeks if there are no flaws in the testing. The FAA approved Boeing’s approach to fixing the battery system in March, and LaHood on April 5 called that concept a “good plan.”

In the end, the company, airlines and the regulators want the same thing: a safe plane, McGraw said.

“Boeing knows they can’t afford to have another problem with this airplane,” McGraw said.

To contact the reporters on this story: Thomas Black in Dallas at tblack@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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