Boeing probe focuses on battery, more checks due

TAKAMATSU, Japan Sat Jan 19, 2013 3:44am IST

The burnt auxiliary power unit battery removed from a Japan Airlines Boeing 787 Dreamliner jet is seen in this picture provided by the U.S. National Transportation Safety Board (NTSB) and obtained by Reuters on January 16, 2013. REUTERS/U.S. National Transportation Safety Board/Handout

The burnt auxiliary power unit battery removed from a Japan Airlines Boeing 787 Dreamliner jet is seen in this picture provided by the U.S. National Transportation Safety Board (NTSB) and obtained by Reuters on January 16, 2013.

Credit: Reuters/U.S. National Transportation Safety Board/Handout

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TAKAMATSU, Japan (Reuters) - U.S. and Japanese aviation safety officials wrapped up their initial investigation of a badly damaged battery from a Boeing Co(BA.N) 787 Dreamliner jet on Friday, saying further checks would be held in Tokyo and could take a week to complete.

But the top U.S. transportation official, Ray LaHood, said the 787 would not fly until regulators were "1,000 percent sure" it was safe. A week earlier, LaHood said he would not hesitate to travel on a Dreamliner.

Officials from the Federal Aviation Administration (FAA), U.S. National Transportation Safety Board (NTSB) and Boeing joined Japanese authorities looking into what caused warning lights to go off this week on an All Nippon Airways Co (9202.T) domestic flight, prompting the aircraft to make an emergency landing at Takamatsu airport in western Japan.

The incident prompted regulators in the United States and around the world to ground the 50 Dreamliners in service. The lightweight, mainly carbon-composite 787 has been plagued by mishaps. Safety concerns centered on its lithium-ion batteries, which pack more energy and are faster to recharge but potentially more volatile.

A Japanese safety official onsite at Takamatsu airport told reporters it was possible that excessive electricity may have overheated the battery and caused liquid to spill out. Pictures released by investigators of the battery showed a burnt-out blue metal box with clear signs of liquid seepage.

GS Yuasa Corp (6674.T), the Japanese firm that makes batteries for the Dreamliner, said it sent three engineers to Takamatsu to help the investigation.

A person at the company, who asked not to be named due to the sensitivity of the issue, said: "Our company's battery has been vilified for now, but it only functions as part of a whole system. So we're trying to find out exactly where there was a problem within the system."

At a news conference, the Japan Transport Safety Board (JTSB) said the charred battery and the systems around it would be sent to Tokyo for more checks. It said there were similarities with an earlier battery fire on a Japan Airlines Co (9201.T) 787 parked at Boston's Logan International Airport.

"This information will go to Boeing and the FAA. They will assess it" before allowing the 787 to fly again in Japan, said Hideyo Kosugi, a JTSB inspector. "We hope to produce a report as soon as possible ... within a week. The United States analysis may take a bit longer than this."

LaHood, the U.S. transportation secretary, said Friday he could not predict when the 787 would resume flight.

"So those planes aren't flying now until we really have a chance to examine the batteries ... That seems to be where the problem is," said LaHood, who told a news conference on January 11 he would not hesitate to fly on the plane himself.

When pressed by reporters on Friday about whether he regretted his prior statements, LaHood said, "Last week it was safe." What has changed since then, he said, is the fact that another incident occurred involving the batteries.

Boeing shares fell 0.3 percent to $75.04. Since the recent spate of issues began in early December, the stock is up 1.4 percent, against a gain of 5.4 percent for the S&P 500 over the same period.

GRAPHIC: Dreamliner incidents r.reuters.com/xej35t

GRAPHIC: Who makes the 787 r.reuters.com/fyp35t

Shares in the Kyoto-based battery maker GS Yuasa rose as much as 3.9 percent on Friday, having dropped around 18 percent since the January 7 battery fire in the auxiliary power unit (APU) of the JAL plane at Boston.

The U.S. investigation into that incident is focused on the Japanese-made batteries, with no indication the APU - built by United Technologies Corp's (UTX.N) Pratt & Whitney - was involved, said a person familiar with the government probe, who was not authorised to speak publicly.

Mark Rosenker, a former NTSB chairman, said Boeing conducted over 1.3 million hours of testing before deciding the lithium-ion batteries were safe to use on the 787, and the company had to satisfy additional rigorous tests to be granted "special condition" by the FAA to use the batteries.

"I don't believe there was corner cutting in any way," he said. "I believe the FAA has done a good job in its certification process. And Boeing is a very formidable and extremely careful airplane manufacturer. You don't survive in this business by not making safe, efficient and reliable planes."

BIGGEST MARKET

Japan is the biggest market so far for the 787, with ANA and JAL operating 24 of the 290-seat wide-bodied planes, which have a list price of $207 million. Boeing has orders for close to 850 of the planes.

Goldman Sachs estimated the hit to ANA's annual operating profit could be up to $40 million if the grounding of its 17 Dreamliners drags on through March. The plane makes up close to a tenth of ANA's fleet and is crucial to its growth strategy.

ANA cancelled more than 60 domestic and international flights scheduled through Monday, affecting more than 10,000 passengers. JAL has cancelled 8 Dreamliner flights on its Tokyo-San Diego route until January 25. Other flights will switch to older planes.

A spokesman for the airline said ANA remained committed to the Dreamliner. "The Boeing 787 is an absolutely wonderful aircraft and we will spare no effort to help it get back in the air safely as soon as possible," said Hideya Oishi.

Australia's Qantas Airways (QAN.AX) said it cancelled an order for one of 15 Dreamliners earmarked for its budget arm Jetstar. It said the decision to cancel was taken late last year, before the plane's recent problems. Qantas has options to order 50 of the new generation aircraft.

Separately, Japan's transport ministry said a fuel leak on another JAL-operated 787 last week was due to a malfunction in a drive mechanism that controls a valve. It said the British company that makes the valve was investigating. The ministry declined to name the firm.

BAD BATCH?

The use of new battery technology is among the cost-saving features of the 787, which Boeing says burns 20 percent less fuel than rival jetliners using older technology.

Hans Weber, president and owner of TECOP International Ltd, a San Diego-based aviation consulting firm and former adviser to the FAA, said it was possible the incidents could be the result of a bad batch of batteries.

"We have to consider the suppliers were at one time producing a lot of equipment for the 787 and then everything got delayed, so some of the stuff they built has been sitting on the shelf for a while. Some of these might have been produced early in the production process and there may have been some deficiencies in the production process," he said.

The 787, a leap in aircraft design, has been plagued by cost overruns and years of delays, though orders last year helped Boeing overtake rival Airbus EAD.PA as the world's largest manufacturer of passenger jets.

(Additional reporting by Yoshiyuki Osada, James Topham, Mari Saito, Issei Kato, Maggie Lu Yueyang, Herng Shinn Cheng, Ruairidh Villar, William Rigby, Alina Selyukh and Andrea Shalal-Esa; Writing by Ian Geoghegan; Editing by Jeremy Laurence, Gary Hill, Kenneth Barry and David Gregorio)

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