Boeing Cleared by U.S. FAA to Test 787 Battery Changes

Boeing Co. (BA) was cleared by U.S. regulators to test its proposed redesign of the 787 Dreamliner’s battery systems, the first step toward resuming service of a plane grounded worldwide for almost two months.

Boeing will be allowed “limited test flights” with two 787s that will have prototype components of the new battery system, the U.S. Federal Aviation Administration said in a statement. Boeing must prove in flight and laboratory tests that the design meets U.S. standards, and the FAA could insist on more changes, the agency said in a statement yesterday.

While it’s unclear when the 787 will carry passengers again, the decision signals Boeing can limit the damage to its most sophisticated model from lithium-ion battery issues. The worldwide fleet of 49 Dreamliners has been parked since Jan. 16 after two incidents of batteries overheating and smoking.

“Today’s approval from the FAA is a critical and welcome milestone toward getting the fleet flying again and continuing to deliver on the promise of the 787,” Boeing Chairman and Chief Executive Officer Jim McNerney said in a statement.

Boeing shares rose 1.5 percent yesterday to $84.16, the highest closing price since May 2008, after people familiar with the matter said the company won an order from Ryanair Holdings Plc. for single-aisle 737s valued at $15.1 billion. The shares rose as high as $84.50 in trading after the close of New York Stock Exchange trading, following the FAA announcement.

Resumption Timeframe

Boeing has given customers a timeframe for when to expect commercial flights to resume, though not a specific date, Philip Scruggs, chief marketing officer at International Lease Finance Corp., told reporters yesterday at the International Society of Transport Aircraft Traders conference in Orlando, Florida. ILFC has ordered 74 Dreamliners, according to Boeing’s website.

“It’ll be this summer,” he said. “There’s not going to be a huge delay.”

The redesign includes new components to minimize potential of a short-circuit, battery insulation between cells to halt the spread of fire, and a new heat-resistant case and venting system, according to the statement. The battery enclosure will ensure that fire can’t develop inside, according to Boeing. The voltage range of the batteries, made by Kyoto, Japan-based GS Yuasa Corp. (6674), will also be limited.

“This comprehensive series of tests will show us whether the proposed battery improvements will work as designed,” U.S. Transportation Secretary Ray LaHood said in a statement. “We won’t allow the plane to return to service unless we’re satisfied that the new design ensures the safety of the aircraft and its passengers.”

‘Very Compelling’

Because investigators don’t know what triggered the incidents on a Japan Airlines Co. 787 after landing in Boston and on an All Nippon Airways Co. (9202) flight in Japan, the fixes are designed to head off every possible way the batteries can fail, FAA Administrator Michael Huerta told Congress Feb. 28.

“We don’t want to be here, but given where they were, it’s a very compelling solution,” John Plueger, president and co- founder of Air Lease Corp. (AL), said in an interview yesterday. The Los-Angeles based company has 12 787s on order, with deliveries set to start in 2017.

“As this is a very complete fix, I believe testing will validate it, and I don’t expect any other problems, so it should be a relatively quick return to service,” he said.

The U.S. National Transportation Safety Board hasn’t identified what triggered a short-circuit on the JAL battery that burst into flames shortly after landing.

The safety board, which has no regulatory authority and no say on when the Dreamliner can resume flying, issued an interim report March 7 raising new questions about how Boeing determined the batteries were safe.

Second Incident

The FAA grounded the 787 after the ANA plane made an emergency landing at Takamatsu airport in southern Japan Jan. 16 because a battery overheated, emitting smoke and fumes. Aviation regulators around the globe followed the FAA’s lead.

A separate FAA review of the 787’s design, manufacturing and assembly is under way. That effort was announced Jan. 11, when Huerta and LaHood pronounced the plane safe.

After the grounding, LaHood said several times he wouldn’t approve a resumption of 787 flights unless he was certain the fix would work. Regulators must be “1,000 percent sure” the plane is safe, he said Jan. 17.

The FAA-approved plan specifies the tests that Boeing must pass before the plane is approved for passenger service, according to the agency statement. The tests will be based on guidelines for lithium-ion batteries adopted by RTCA Inc., a non-profit corporation that advises the FAA on technical matters. Those guidelines weren’t written when FAA approved the 787 batteries in 2007.

FAA Engineers

The agency’s engineers will observe and be “closely involved” in all testing, according to the release. The NTSB has been probing the role that Boeing employees played in approving the plane’s systems during initial testing prior to its certification in 2011.

Boeing said it has insisted on enhanced testing and quality control before battery assembly.

The 787 entered commercial service in late 2011, after more than three years of production delays. Boeing has delivered the planes to eight airlines, of which one, United Continental Holdings Inc. (UAL), is based in the U.S.

The twin-engine jet has a starting list price of about $207 million and is being marketed at airlines for long-haul routes. Lightweight composite-plastic materials and a reliance on electricity, not air diverted from engines, to run the plane’s systems help improve fuel economy and range.

ANA, the first and biggest operator of 787s with 17 in its fleet, rose 1.5 percent to close at 205 yen in Tokyo, its highest since July 2. The benchmark Nikkei 225 stock average fell 0.6 percent.

“As the launch customer we look forward to an early resumption of flights, with the priority being on safety,” Ryosei Nomura, a spokesman for ANA, said by telephone. “We see the FAA’s approval as a big step forward.”

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: Ed Dufner at edufner@bloomberg.net; Bernard Kohn at bkohn2@bloomberg.net

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