Aug. 20 (Bloomberg) -- A China Airlines plane with 157 passengers on board caught fire after its right engine burst into flames and spread to its left engine at Naha airport in Okinawa, Japan, a popular beach resort. The passengers and crew were evacuated safely, the Taipei-based airline said.

The engines of the Boeing Co. 737-800 caught fire at about 10:35 a.m. after the plane had landed and while it was taxiing to the gate, Johnson Sun, a spokesman for Taipei-based China Airlines said. Terrorism was ruled out as a cause, he said.

The fire heightens safety concerns at Taiwan's national airline which has had four fatal accidents in the past 14 years. Taiwan air safety officials have been dispatched to Okinawa to investigate the cause, which wasn't immediately clear.

``This will benefit EVA Airways, as passengers turn to the airline's nearest rival because of safety concerns,'' Stone Lin, who rates China Airlines and EVA Airways Corp. ``buy'' in coverage at Yuanta Core Pacific Securities in Taipei.

Passengers and crew were evacuated through emergency chutes and could be seen on amateur video broadcast on Taiwan's TVBS television station running across the tarmac away from the aircraft as flames and smoke billowed from the broken fuselage. The nose of the aircraft was seen resting on its side with a gaping hole in its roof. Firefighters extinguished the blaze by 11:37 a.m. by spraying foam on the aircraft.

Two airport engineers on the tarmac spotted fuel leaking and alerted the captain, Akihiko Tamura, the director of Japan's Civil Aviation bureau, told journalists in Tokyo. The airplane's crew evacuated the plane within 90 seconds, Tamura said.

No Problems

No problems were reported between takeoff and landing, Sun said. Naha airport was temporarily shut after the fire and reopened at 11:03 a.m., said Soichi Yatsugi, a spokesman at Japan Airlines Corp.

Taiwan's Civil Aeronautics Administration sent three inspectors to Naha this afternoon and another three to China Airline's Taoyuan, northern Taiwan, facility to conduct investigations, Lee Wan-lee, the administration's director of operations said by phone.

Authorities have ordered a mandatory inspection of all 14 Taiwan-owned 737-800 aircraft upon their return to Taiwan, Lee said. Those aircraft haven't been grounded, he said.

Felt Unwell

Two passengers, a 57-year-old man and a 7-year-old girl, were taken to a hospital after they said they felt unwell after being evacuated, the transport ministry said. Flight CI 120 took off from Taipei at 8:15 a.m., carrying 110 Taiwanese and 23 Japanese passengers, China Airlines said in a statement. Staff consisted of two pilots and six crew members.

A crash on landing at Nagoya airport in central Japan in 1994 left 264 people dead, according to the Aviation Safety Network's Web site. Three other fatal accidents have followed, with 225 people perishing in May 2002 when a Boeing 747 en route to Hong Kong broke up in mid-air near Penghu, in the Taiwan Strait.

The aircraft involved in today's fire was equipped with CFM International CFM56-7B26 engines, according to China Airlines' Web site. CFM56-7B series engines entered service on 737-800s in the first quarter of 1998, according to CFM's Web site. CFM is a venture between General Electric Co. and Snecma SA.

Engine Fire

A CFM56-7B engine on a Boeing 737-700 aircraft operated by Southwest Airlines Co. caught fire on July 7, 1998, as it descended to land at Birmingham, Alabama, according to the U.S. Federal Aviation Authority's Accident and Incident Database. Staff on board that flight reported seeing flames coming from the number two engine's exhaust, the report said. Faults were later found in the engine's hydro-mechanical unit fuel-meter valve, it said.

``We are not in a position to comment ahead of an investigation,'' Antoinette Menard, a Paris-based spokeswoman for CFM said by phone.

The engine that caught fire completed its last inspection on July 13 this year with no known faults, the CAA's Lee said. The engine had 13,666 flight hours at the time of the inspection. Authorities have ordered a mandatory inspection of all 14 Taiwan-owned 737-800 aircraft upon their return to Taiwan while those aircraft haven't been grounded, Lee said.

China Airlines won't face any significant financial losses as a result of the incident because the aircraft is fully insured and other planes will be used to cover the route, Sun said.

Today's 4:10 p.m. CI 122 flight from Taipei to Naha, which was due to use the same aircraft, left using an Airbus SAS aircraft instead, Sun said.

Taiwan Fire & Marine Insurance Co. will fly assessors to Japan soon to estimate the losses, the insurer's vice president C.H. Chang said by phone today. The company has insured the airline for more than 10 years.

China Airlines, Taiwan's largest carrier, trailed gains by the country's benchmark index today. The carrier's shares rose 1.5 percent to NT$13.20 at the close of trading in Taipei. Taiwan's Taiex index advanced 5.3 percent.

To contact the reporter on the story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Yu-huay Sun in Taipei at ysun7@bloomberg.net

Last Updated: August 20, 2007 06:51 EDT