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United Air Grounds 777 Fleet for Fire-Safety Checks (Update7)

By Mary Schlangenstein

April 2 (Bloomberg) -- UAL Corp.'s United Airlines, the largest U.S. operator of Boeing Co. 777s, grounded its fleet of 52 of the wide-body jets after failing to make required checks of the planes' fire-suppression system.

The carrier canceled 38 of its 84 daily flights with 777s while working to finish the inspections by tomorrow, spokeswoman Megan McCarthy said. The Federal Aviation Administration said it didn't order the groundings.

United's disclosure may ramp up congressional pressure for tighter federal oversight of airline maintenance. It comes on the eve of a Washington hearing called by Representative James Oberstar, a House committee chairman who says the FAA has a ``cozy'' relationship with the carriers it regulates.

``Everyone is erring on the side of caution, partly to send a message that the system works and partly just to be cautious,'' said Richard Aboulafia, director of aviation for consulting firm Teal Group in Fairfax, Virginia. ``It seems like the system is responding in an appropriate manner.''

The twin-engine 777s make up about 11 percent of the 460- plane fleet at United, the world's second-largest airline. The Chicago-based carrier said it failed to test the firing mechanism on one of five canisters in the jets' cargo-bay firefighting system.

No Breakdowns Found

No breakdowns were found in the first 26 planes checked by the airline, nor were there any indications that the devices wouldn't have worked in the event of a fire, United spokeswoman Jean Medina said. United may have to cancel some flights tomorrow while it continues the inspections, she said.

``This is something required by their maintenance program,'' said Les Dorr, a spokesman for the FAA. ``We didn't tell them to ground the planes.''

UAL fell $1.09, or 4.7 percent, to $22.04 at 3:07 p.m. New York time in Nasdaq Stock Market composite trading.

Among the grounded planes is the chartered United jet carrying the White House press corps and some White House employees who are traveling on President George W. Bush's trip to eastern Europe.

The plane is in Bucharest, where Bush is staying until April 4. The plane will be inspected and no delays are expected, White House spokesman Scott Stanzel said.

Thirty-three of United's 777s are extended-range models used primarily for international flights, said Douglas Runte, managing director at RBS Greenwich Capital in Greenwich, Connecticut. The daily 777 departures are about 2.5 percent of United's total of 3,300 flights.

`Right Steps'

United ``is taking the right steps'' with the temporary grounding of the 777s, said James M. Higgins, a Soleil Securities Corp. analyst based in Solebury, Pennsylvania, who has a ``buy'' rating on UAL. ``Most people would rather airlines err on the side of extreme safety.''

The lack of fire-system tests is the second maintenance issue discovered at United since the FAA stepped up scrutiny of airline repairs last month.

Last month, United had to retest instruments on seven Boeing 747s after learning equipment used for inspections was overdue to be calibrated. United and U.S. regulators also are probing crossed landing-gear wires that may have caused two Airbus SAS A320 jets to skid off runways over the past four months, before the FAA crackdown.

The FAA proposed a $10.2 million fine against Southwest Airlines Co. on March 6 over missed inspections for fuselage cracks. Four carriers face probes and possible fines for not following safety directives, the agency said today, without naming the airlines.

Refunds for Cancellations

United customers booked on canceled 777 flights can get a full refund, while those shifted to other flights on the planes can change their plans without paying the usual fee, the airline said.

The carrier's extended-range 777s are an average of 9.2 years old, according to industry database Ascend Online Fleets. The 19 others average 11.5 years. Their maximum range is about 8,900 miles (14,300 kilometers) in the extended-range version, and they can seat as many as 368 passengers, according to Boeing's Web site.

United said in January it had delayed the sale of its maintenance operation to consider a ``creative proposal'' from an unidentified bidder. The airline earlier had said it hoped to make a divestment decision in the quarter that ended March 31. The airline's mechanics voted that day to leave their current union and switch to the Teamsters.

Last week, American Airlines and Delta Air Lines Inc. grounded their Boeing MD-80 jets while complying with a government directive for ensuring the proper fastening of wiring bundles inside the planes.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

Last Updated: April 2, 2008 17:52 EDT