UPDATE 2-Boeing 787 Dreamliner faces review after mishaps -US agency

Fri Jan 11, 2013 8:38am EST

* Regulators to examine design, manufacture and assembly

* More incidents in Japan test confidence in new plane

NEW YORK Jan 11 (Reuters) - Boeing Co's sophisticated new aircraft, the 787 Dreamliner, will undergo a review of its critical systems by regulators, the U.S. Department of Transportation said on Friday after a series of problems in recent weeks.

The review of the jet will involve design, manufacture and assembly, including a battery that caught fire on an empty 787 parked in Boston on Monday.

Adding to the tally of incidents that have tested confidence in the Dreamliner, on Friday the passenger jet suffered a cracked cockpit window and an oil leak on separate flights in Japan.

The U.S. Department of Transportation said it plans to announce more details of the review at a press conference Friday at 9:30 am ET (1430 GMT).

The 787 is Boeing's newest jet and its boldest effort to revolutionize commercial aviation by using new technology to cut the fuel cost for operating the plane by 20 percent. Airlines are pleased with the savings, and have so far given the plane their approval, both by ordering more than 800 jets and sticking by it through the current spate of troubles.

But Boeing already is far over its budget and more than three years behind schedule in delivering Dreamliner planes, and any further expenses or problems have the potential to affect the company's finances significantly.

The wide-ranging review by U.S. officials, including the Federal Aviation Administration, has the potential to deal a serious setback to Boeing's newest jet, especially if it led to a costly design change.

Analysts have said that a problem in manufacturing or assembly of the plane would probably be fixed with minimal cost and disruption. Most have said that the issues with the plane so far appear to fall into those categories.

On Friday in Japan, All Nippon Airways Co said a domestic flight from Tokyo landed safely at Matsuyama airport in western Japan after a crack developed on the cockpit windscreen, and the plane's return to Tokyo was canceled.

The same airline later said oil was found leaking from an engine of a 787 Dreamliner after the plane landed at Miyazaki airport in southern Japan. An airline spokeswoman said it later returned to Tokyo after some delay. No one was injured in either incident.

As Boeing's 787 comes under review, the company is involved in difficult labor contract negotiations with its engineering union, which represents the workers who would be called upon to solve any problems with the Dreamliner.

The two sides resumed talks on Wednesday that broke off in December after federal mediators joined the sessions. There was no breakthrough in the two days of meetings this week. The talks were scheduled to resume on Friday.

Scott Hamilton, an analyst with the aerospace industry consultant Leeham, said "the prospects of a total breakdown in talks appears more and more likely, perhaps as soon as today. If this happens, look for a strike voted early next week. A walk-out could occur in early February."