U.S. regulators on Friday approved a revamped battery system for Boeing Co's (BA.N) 787 Dreamliner, a crucial step in returning the high-tech jet to service after it was grounded in January because the plane's lithium-ion batteries overheated.
The Federal Aviation Administration said it had approved a package of detailed design changes, a move that allows Boeing to issue a service bulletin and begin making repairs to the fleet of 50 planes owned by eight airlines around the world. Other global regulators must approve Boeing's new design for the repairs outside the United States, but were expected to act quickly once the FAA gave its blessing.
The FAA action all but ends a grounding that has cost Boeing an estimated $600 million, halted deliveries and forced some airlines to lease alternative aircraft. Several airlines have said they will seek compensation from Boeing, potentially adding to the plane maker's losses.
The agency also said the jet retained permission to fly up to 180 minutes over remote areas and oceans once U.S. regulators allowed the Dreamliner to return to the skies. There had been talk of scaling back the approved range, known as ETOPS, which would have limited the use of the fuel-efficient jet.
Boeing CEO Jim McNerney said the 787's promised benefits "remain fully intact."
Reaction in the industry was swift and joyous.
"We're back in business, baby!" tweeted the Washington Aerospace Partnership, a group of business, labor and local government leaders supportive of Boeing.
"This is a good step forward," United Airlines (UAL.N) said in a statement. United is the only U.S. carrier with 787s and plans to add them to its schedule starting May 31. Plans to launch service from Denver to Tokyo Narita are set for June 10, but depend on completing the modifications by then, it added.
The FAA said it will tell airlines next week what changes to make and will publish a directive that "will allow the 787 to return to service with the battery system modifications." It said directive would take effect when it is published.
Mark Rosenker, who headed the National Transportation Safety Board under George W. Bush, said the FAA clearly believed that Boeing's proposed changes would avert further problems.
"It's good news for Boeing, it's good news for the airlines and it should give the flying public a sense of safety and reliance and well-being," said Rosenker. He said he expected airlines to resume flying the planes in May.
Richard Aboulafia, aviation analyst at Teal Group, said Boeing could still run into problems with other international aviation regulators and the NTSB, which is holding a hearing on the battery issues next week.
"They're not out of the woods yet, but this is a big step," he said. "Now it's just a question of how quickly they can install the system."
Aboulafia said Boeing also faced claims from airlines for the three-month grounding, which would compound the much-higher-than-expected cost of launching the new aircraft. Boeing had expected to spend about $4 to $5 billion on the new composite plane, but the cost was now closer to $20 billion, he said.
"This has just been another increment of pain on top of a whole lot of other pain," Aboulafia said.
Much of the design change in the battery system already is well-known, thanks to Boeing's detailed descriptions of the system to customers, legislators and media.
Before the planes can fly, they must be fitted with a "containment and venting" system for both lithium-ion batteries on the 787, the FAA said. That includes a stainless-steel enclosure to prevent heat, fumes or fire from spreading if a battery overheats in flight. Batteries and battery chargers must also be replaced with different components, the FAA said.
Boeing teams around the globe were ready to quickly repair the jets. The company also has been conducting regular flights of the 787 to test it before delivery, a process that will speed the process of getting 787s to customers that have been waiting while the plane was grounded.
In approving the change, the FAA is indicating that it believes Boeing's fix is adequate to address the risk of fire on the plane. However, the NTSB continues to investigate what caused a battery to catch fire on a Japan Airlines plane that was parked at the airport in Boston.
The NTSB, the top U.S. transportation investigator, is holding a two-day investigative hearing next week to help it get to the bottom of what caused the fire.
Boeing has said its new design addresses more than 80 potential causes of fire, and therefore is more rigorous than if a single cause had been found.
On Friday, the NTSB said it would call senior FAA and Boeing officials to testify at the hearing. The agency also is calling officials from Thales SA (TCFP.PA), the French company that makes the battery system, and GS Yuasa Corp (6674.T), the Japanese company that made the actual battery.
Among those included: Dorenda Baker, the director of the FAA's aircraft certification service, and Ali Bahrami, the manager of the FAA's transport airplane directorate and head of the Seattle FAA office, which has close connections with Boeing's factories in Washington state.
The NTSB also will call Mike Sinnett, Boeing's chief 787 project engineer, who has been the frontman for Dreamliner engineering questions throughout the grounding.
(Reporting by Alwyn Scott, Andrea Shalal-Esa and Tim Hepher; Editing by Gerald E. McCormick, Stev Orlofsky and Eric Walsh)
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