Resolution to 787's battery fires may weigh on Boeing

Print
Font Size:
Default font size
Larger font size

Posted: Thursday, January 24, 2013 12:00 am

Until smoldering batteries forced safety regulators to ground Boeing's new 787 Dreamliner jets recently, the aircraft manufacturer was flying high, with soaring profits and a recently regained No. 1 ranking in jet deliveries over Airbus.

But the grounding, prompted by a battery fire on one jet and the emergency landing of another, has knocked Boeing off stride. Now, investors as well as government officials are paying close attention to see how big the issue becomes for the company, which is one of the nation's biggest exporters.

Although company officials said they expected to find a solution quickly, federal regulators have ruled out one simple explanation for the fire — that the battery was overcharged. If the problems prove more complicated, they could threaten Boeing's plans to expand production of the planes, and the jobs that go with them.

“Boeing has a lot at stake, for its headlining airliner and for the company brand,” said Scott Hamilton, the managing director of the Leeham Co., an aviation consulting firm in Issaquah, Wash.

Hamilton said he had no doubt that Boeing “will work its way through this.” But until more was known about the batteries, he said, “it's impossible to draw conclusions about what went wrong, what the fix is, how long it will take and what the long-term damage to the 787 and to the Boeing brands will be.”

In what would seem to be the worst possible outcome right now, Boeing might also have to redesign its powerful new lithium-ion battery system, or even switch back to older, safer models. Aviation experts said such changes could cost hundreds of millions of dollars and shave off some of the 20 percent savings in fuel costs that the new jets have delivered.

Analysts say Boeing, which has about $80 billion a year in sales, has the financial muscle to weather the problems and make production of the next generation of airliners succeed in an industry familiar with outsize bets.

But the recent incidents were a reminder of the manufacturing and testing mishaps that delayed the development of the planes. And any lengthy new delay could tax the patience of airlines and investors who thought the Chicago-based company had put the problems behind it.

The Federal Aviation Administration grounded the jets after another 787 made an emergency landing in Japan on Wednesday because of a smoke alarm in the cockpit. The FAA's order applied to six United jets; another 44 around the world have also been grounded.

The National Transportation Safety Board said that it ruled out excessive voltage as the cause of the battery fire on the 787 in Boston, adding to the mystery of what caused the problem.

Boeing was probably spending anywhere from several hundred thousand dollars to $1.5 million a day to compensate carriers for lost passenger traffic or the need to lease other jets to maintain service, analysts said.

Boeing also plans to keep building new 787s, at its current rate of five a month, to keep its supply chain intact.

Copyright ©2014 Omaha World-Herald. All rights reserved. This material may not be published, broadcast, rewritten, displayed or redistributed for any purpose without permission from the Omaha World-Herald. To purchase rights to republish this article, please contact The World-Herald Store.


loading...

SPOTLIGHT »

Inside Business
To submit an announcement for "Inside Business", click here. For questions call (402) 444-1371 or e-mail announcements@owh.com.

World-Herald Alerts

Want to get World-Herald stories sent directly to your home or work computer? Sign up for Omaha.com's News Alerts and you will receive e-mails with the day's top stories.