Boeing Dreamliner to Be Reviewed as LaHood Calls It Safe

Jan. 11 (Bloomberg) -- U.S. regulators said they will perform a far-reaching review of the design, manufacturing and assembly of Boeing’s 787 Dreamliner after a fire on a Japan Airlines jet this week and several incidents last year. Peter Cook reports on Bloomberg Television's "Market Makers." (Source: Bloomberg)

U.S. regulators said they will perform a far-reaching review of the design, manufacturing and assembly of Boeing Co. (BA)’s 787 Dreamliner after a fire on a Japan Airlines Co. (9201) jet this week and several incidents last year.

“We are confident about the safety of this aircraft, but we’re concerned about these incidents and we will conduct the review until we’re completely satisfied,” Michael Huerta, head of the Federal Aviation Administration, said at a press conference today in Washington.

The FAA is looking to reassure itself, regulators in other countries and the flying public that Boeing’s most technologically complex jet is safe. The 787 has become Boeing’s fastest-selling model ever, with 848 orders through the end of 2012, according to the planemaker’s web site. There are now 50 in service, after the plane’s 2011 commercial debut.

The examination stops short of emergency actions such as mandatory fixes or a fleet grounding that the Washington-based FAA has imposed after discovering safety issues on other models. The U.S. National Transportation Safety Board classified the Jan. 7 fire in Boston as an “incident,” not an accident.

“I believe this plane is safe and I would have absolutely no reservations of boarding one of these planes and taking a flight,” Transportation Secretary Ray LaHood said at the press conference.

Boeing fell 2.5 percent to $75.16 at 4 p.m. in New York. The Chicago-based planemaker’s shares gained 0.5 percent in the 12 months that ended today.

Electrical Systems

Regulators in their review will emphasize the electrical systems, batteries and power distribution panels in the Dreamliner and how the electrical and mechanical systems of the airplane work together, Huerta said.

“Boeing shares the same commitment to air travel safety that Transportation Secretary LaHood and FAA Administrator Huerta spoke of this morning in Washington, D.C.,” Boeing Chief Executive Officer Jim McNerney said in an e-mailed statement, his first comments since the Jan. 7 fire. “We also stand 100 percent behind the integrity of the 787.”

Details of how many people will be involved in the review and how long it will take weren’t released. The evaluation probably will start in Seattle, home to the FAA office that certified the 787 and to Boeing’s commercial hub, and “may expand to other locations over the course of several months,” the agency said in a statement. Boeing engineers will participate in the review process.

’Long Memories’

Investors have “long memories” of delays and technical difficulties Boeing had getting the 787 into service, which magnifies incidents as they occur, Howard Rubel, an analyst with Jefferies Group Inc. in New York, said in a note today. He has a buy rating on the stock.

“The program has been on track for quite some time and costs appear to be coming down,” Rubel wrote.

The FAA review is in addition to a safety-board probe of the fire that the agency said caused severe damage to the battery pack area of the 787 after passengers disembarked in Boston following a flight from Tokyo. A couple of jets were grounded last month by a power fault which Boeing said this week it had traced to flaws in power panels.

Boeing has marketed the twin-engine jet as a way to open new routes between far-flung cities that don’t need the capacity of larger wide-bodies such as the 777 and the 747 jumbo jet. The FAA has approved the 787 for flights of as long as 180 minutes away from landing strips, and Boeing said this week it’s in final talks to extend that to 330 minutes.

‘Complete Confidence’

“We have complete confidence in the 787 and so do our customers,” said Boeing Commercial Airplanes President Ray Conner, who flew to Washington to attend the press conference.

He also issued a statement to Boeing employees reassuring them the FAA’s actions didn’t threaten the 787 program.

This isn’t the first time the FAA has examined the safety of a new airplane model after its introduction, said Huerta, who didn’t identify previous examples.

“In recent times, we haven’t had any type of review like this,” said Kevin Hiatt, a retired airline pilot who is president of the Flight Safety Foundation in Alexandria, Virginia. “It’s very prudent.”

The review also gives the FAA a chance to examine its own rules for aircraft design and certification, Hiatt said.

“You’ve got rules at the FAA that haven’t been changed since the propeller days,” he said. “We’re now looking at the most modern, advanced jet airliner ever produced and we’re still using processes and procedures that may need a little bit of a review.”

An examination of the jet is needed to calm the public after a week of damaging publicity, Michael Barr, an instructor at the University of Southern California’s Aviation Safety and Security Program, said in a telephone interview today.

‘Propeller Days’

“The 787 is so pushing the envelope as far as modern technology and science that there’s not a lot of history behind the systems that they’ve put in the 787,” Barr said. “They’re learning every day.”

The Dreamliner conserves fuel by using five times more electricity than other similar jets and by saving weight with a fuselage and wings made from composite materials, not aluminum. Some existing FAA regulations didn’t cover the new technologies, so the plane was certified with multiple “special conditions.”

200,000 Hours

Those conditions as well as the way the FAA approved the jet will also be reviewed, Huerta said. The agency spent 200,000 personnel hours reviewing, testing and certifying the 787, he said.

United Continental Holdings Inc. (UAL) has “complete confidence in the 787 and in the ability of Boeing, with the support of the FAA, to resolve these early operational issues,” said Megan McCarthy, a spokeswoman for the Chicago-based carrier. United continues to operate all six of its Dreamliners as scheduled, she said.

India’s government, owner of Air India Ltd., is concerned about the problems reported elsewhere, an aviation ministry official said today, asking not to be identified citing government rules. The nation’s aviation regulator is awaiting the U.S. reports on the aircraft.

Air India received its sixth Dreamliner on Jan. 7.

While acknowledging the incidents have marred the Dreamliner’s record, Conner said none have been a threat because the plane has so many layers of safety protections.

“Once the incidents have happened, the airplane has performed exactly as designed,” he said. “The redundancies that we have put into this machine are phenomenal and the airplane performed perfectly in that respect.”

To contact the reporters on this story: Alan Levin in Washington at alevin24@bloomberg.net; Susanna Ray in Seattle at sray7@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Ed Dufner at edufner@bloomberg.net

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