Boeing 787 Woes Stump Investigators Prolonging Grounding

The U.S. probe into battery incidents on Boeing Co. (BA)’s 787 Dreamliner may drag on for months, leaving murky at best the pathway for the company’s most advanced plane to return to the skies.

Investigators for the National Transportation Safety Board are poring over microscopic battery remains, production records and circuitry while running tests to rule out other potential causes of overheating that prompted the U.S. Federal Aviation Administration to ground the jetliner two weeks ago.

U.S. Transportation Secretary Ray LaHood said today regulators are “not feeling any pressure” to get the plane back in the air and are studying the entire jetliner, while focusing on the batteries.

“The worst scenario is you don’t find anything,” John Hansman, an aeronautics and astronautics professor at the Massachusetts Institute of Technology, said in an interview. “And if you don’t find anything, you actually have to correct all the things it could possibly be, even though there’s no direct evidence. That’s more complicated and expensive.”

All 50 Dreamliners in service around the world have been grounded since Jan. 16 after an All Nippon Airways Co. (9202) 787 made an emergency landing because one of its lithium-ion batteries smoked and became charred. The NTSB and its Japanese counterparts have few definitive clues into what caused that incident and a Jan. 7 battery fire on a Japan Airlines Co. (9201) plane.

Photographer: Andrew Harrer/Bloomberg

A woman examines a battery electrode from a Japan Airlines Co. Boeing Co. 787 Dreamliner at the National Transportation Safety Board materials laboratory in Washington, D.C. Close

A woman examines a battery electrode from a Japan Airlines Co. Boeing Co. 787... Read More

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Photographer: Andrew Harrer/Bloomberg

A woman examines a battery electrode from a Japan Airlines Co. Boeing Co. 787 Dreamliner at the National Transportation Safety Board materials laboratory in Washington, D.C.

“We’re going to get this right,” LaHood told reporters today after a speech in Falls Church, Virginia. “We have to get this right.”

Complex Probe

The battery woes have left Boeing surrounded by uncertainty even as Chief Executive Officer Jim McNerney said in a Jan. 30 earnings call that progress toward finding a cause was being made.

McNerney said on the call that Boeing hasn’t seen anything that causes it to question its choice of lithium-ion batteries, which were approved by the FAA for the Dreamliner in 2007 -- four years before the first plane went into service.

The company’s sales will fall 3 percent below forecasts if the grounding halts deliveries of 787s for six months, and by 6 percent over nine months, Peter Arment, an analyst with Sterne Agee & Leach Inc. in New York, wrote in a note. He’s forecasting 2013 revenue of $84.8 billion, meaning a potential loss of $2.5 billion or $5 billion.

If the investigation ends this quarter and the Chicago- based planemaker’s required fixes are minimal, as Arment expects, the impacts will be “limited in scope,” he wrote.

Photographer: Yuzuru Yoshikawa/Bloomberg

All 50 Dreamliners in service around the world have been grounded since Jan. 16 after an All Nippon Airways Co. 787 made an emergency landing because one of its lithium-ion batteries smoked and became charred. Close

All 50 Dreamliners in service around the world have been grounded since Jan. 16 after... Read More

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Photographer: Yuzuru Yoshikawa/Bloomberg

All 50 Dreamliners in service around the world have been grounded since Jan. 16 after an All Nippon Airways Co. 787 made an emergency landing because one of its lithium-ion batteries smoked and became charred.

‘Multiple Shifts’

In a worst case, Boeing would have to to write off about $5 billion in anticipated revenue, Howard Rubel, a Jefferies & Co. analyst, wrote in a report. Rubel put the odds of that at about 4 percent.

“The biggest swing factor in Boeing’s 2013 guidance is clearly the 787 assumptions,” Arment said.

Boeing has continued production of the Dreamliner even though it can’t deliver them because of the grounding. The company doubled 787 production last year to five a month and is set to double it again this year. Dreamliners stranded by the grounding won’t fly anywhere until the grounding ends, LaHood said today.

The NTSB’s effort to understand what happened has no deadline, Kelly Nantel, an agency spokeswoman, said in an interview.

“We all appreciate the magnitude of this situation and are working tirelessly on this investigation,” Nantel said. “People are working multiple shifts and many days straight without breaks.”

An investigation this complex, with evidence that’s been damaged by fire, could take years, Tom Haueter, the retired aviation investigations chief at the NTSB, said in an interview.

Five-Year Probe

Haueter, now an aviation safety consultant in Great Falls, Virginia, helped lead a probe in the 1990s into suspected rudder flaws on Boeing’s 737 that lasted five years. The flaw in the rudder, a tail surface used primarily to help land in crosswinds, was blamed for crashes near Pittsburgh and in Colorado Springs, Colorado, on 737s that killed 157 people.

Tests of the 737 rudder system kept showing it performed perfectly. Not until three years after a Sept. 8, 1994, crash of a plane flown by US Airways Group Inc. (LCC), then known as USAir, did Haueter and others find evidence that, under an unusual combination of conditions, the rudder could move in the opposite direction that pilots intended and create catastrophic dives.

“Quite frankly, when we found it, it was totally accidental,” he said. “We were looking for something else and bumped into it.”

Interim Steps

Such eureka moments can turn an investigation on a dime, going from years of frustration to clarity in a day, Haueter said. He sees that possibility with the 787 probe.

“It could be very easy that by this afternoon they find something and say, ‘This is what happened.’” he said. “And next week a fix is in place.”

If investigators can narrow the possible causes of the failures to a handful of possibilities, Boeing may be able to install fixes or warning systems to address each of them that would satisfy the FAA, Haueter and Hansman said.

“They don’t have to wait until the investigation is completed,” Haueter said. “They could do some kind of interim fix.”

The FAA allowed the last plane model it grounded, the McDonnell Douglas DC-10, to resume flights before a fix was fully implemented for cargo doors that didn’t latch properly, Cai von Rumohr, an analyst with Cowen & Co. in Boston, said in a note yesterday.

Finding technical fixes is just part of what it will take to resume flights, Hansman said. Boeing and the FAA must also convince lawmakers in Washington and other capitals, and the public, that the plane is safe, he said.

“You are going to have to do something to restore confidence in the batteries,” he said.

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 editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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