GS Yuasa Shares Surge as Japan Ends Company Inspections

GS Yuasa Corp. (6674), the battery maker at the center of investigations on fires that grounded Boeing Co. (BA)’s 787s, surged the most in eight months in Tokyo after Japan’s government said it’s ending on-site inspections of the company.

The stock rose 4.8 percent, the biggest increase since May 29, to 329 yen at close of trading in the city. The shares had tumbled 9.2 percent in the two days since an All Nippon Airways Co. (9202) plane made an emergency landing in Japan on Jan. 16.

Japan’s Civil Aviation Bureau is ending inspections at Kyoto-based GS Yuasa, as no reports of problems with quality control that could affect the battery were made so far, Shigeru Takano, a director for air transportation at the ministry, said in Tokyo today. The government is still checking the battery that was damaged and caused an emergency landing of the All Nippon plane at Takamatsu airport, which led to the global grounding of the 787s.

“The shares overreacted to news of the start of inspections in the first place, so we’re seeing a big rebound with the conclusion of that,” Jun Yamaguchi, an analyst at Credit Suisse Group AG in Tokyo, said by telephone. “It’s probably still going to take some time before we find out the reason for the problem. Yuasa’s stock is likely to suffer from knee-jerk moves in the meantime.”

The global fleet of about 50 Dreamliners, Boeing’s most modern aircraft, have remained grounded since Jan. 16. Chicago- based Boeing can’t deliver more 787 jets until the U.S. Federal Aviation Administration confirms the safety of the Dreamliners.

No Evidence

U.S. investigators examining the battery charger from a Boeing 787 that caught fire this month in Boston have found no evidence of flaws that could have caused the incident. The U.S. National Transportation Safety Board has completed testing of the charger at the Tucson, Arizona, plant where it was made by Securaplane Technologies Inc., the agency said in an e-mailed release yesterday.

Securaplane is a division of Christchurch, England-based Meggitt Plc. (MGGT)

“We don’t know what caused the incident at Takamatsu,” Takano said. “There were some reports of problems with quality control. However, at this point we’re not aware of anything that could have had a direct impact on the incident.”

Japan’s government will begin a probe today of a company based in Fujisawa, near Tokyo, that makes monitors for the battery, Takano said without naming the manufacturer.

Completed Checks

The NTSB said that it had completed checks on the JAL auxiliary power unit’s monitoring unit at Kanto Aircraft Instrument Co., based in Fujisawa, Japan, and found nothing significant, according to a statement yesterday. Kanto Aircraft is a closely-held company.

The government began inspections of GS Yuasa’s headquarters in Kyoto on Jan. 21 to see if there were any problems with quality control or manufacturing that could have led to the battery problems. The company said last week it was fully cooperating with the authorities.

GS Yuasa announced in 2005 that it had won a multiyear, multimillion dollar contract to supply lithium-ion batteries to Thales SA (HO) to be used in Boeing’s 787 Dreamliner. The company first demonstrated its technology in a prismatic lithium-ion battery in 1993.

U.S. officials and Boeing are investigating whether defective batteries from the same batch caused failures in two 787 Dreamliners that triggered the plane’s worldwide grounding two weeks ago, according to two people familiar with the incidents.

Battery Box

Electrolyte was found to have leaked from the battery box of the ANA plane that had an emergency landing on Jan. 16, according to Japan’s transport ministry. The interiors of the battery box were found to be damaged.

The 787 is Boeing’s most technologically advanced plane, featuring a body made of composite materials instead of the traditional aluminum. It conserves fuel by using five times more electricity to power its systems than other planes, and is Boeing’s first model to rely on lithium-ion batteries.

All four plants where GS Yuasa builds lithium-ion batteries are in Japan. The batteries supplied to the Dreamliners are made at a factory in its Kyoto headquarters. The batteries are part of an electrical power conversion system built by France’s Thales SA. United Technologies Corp. (UTX)’s Aerospace Systems unit supplies the overall system, which uses 1.45 megawatts of electricity, enough to power 400 homes.

Boeing chose lithium-ion batteries for the 787 because they hold more energy and can be quickly recharged. Boeing got regulators’ permission to use lithium batteries in the jetliner in 2007, three years after U.S. passenger planes were barred from carrying non-rechargeable types as cargo because of their flammability.

To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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