January 19, 2013 / 1:00 AM / in 5 years

UPDATE 7-Boeing probe focuses on battery, 787 deliveries halted

* U.S. team includes FAA, NTSB and Boeing experts
    * Japanese battery maker also helping in investigation
    * Boeing to continue production
    * ANA cancels more than 60 flights
    * U.S. official: No timetable to return to flight

 (Adds comment)
    By Antoni Slodkowski
    SEATTLE/TAKAMATSU, Japan, Jan 18 (Reuters) - U.S. and
Japanese aviation safety officials finished an initial
investigation of a badly damaged battery from a Boeing Co 
787 Dreamliner jet on Friday as Boeing said it was halting
deliveries until the battery concerns were resolved.
    Boeing said it would continue building the carbon-composite
787, but deliveries were on hold until the U.S. Federal Aviation
Administration approved and implemented a plan to ensure the
safety of potentially flammable lithium-ion batteries that
prompted a widespread grounding of the new airplane this week. 
    In Washington, the top U.S. transportation official, Ray
LaHood, said the 787 would not fly until regulators were "1,000
percent sure" it was safe. A week earlier, LaHood said he would
not hesitate to travel on a Dreamliner.
    Officials from the Federal Aviation Administration (FAA),
U.S. National Transportation Safety Board (NTSB) and Boeing
joined Japanese authorities looking into what caused warning
lights to go off this week on an All Nippon Airways Co 
domestic flight, prompting the aircraft to make an emergency
landing at Takamatsu airport in western Japan.
    The incident prompted regulators in the United States and
around the world to ground the 50 Dreamliners in service.
 The jet has been flying safely for 15 months,
carrying more than 1 million passengers, but it has run into
problems in recent weeks, including problems with fuel leaks.
    The biggest safety concerns centered on its lithium-ion
batteries, which are lighter than conventional batteries, pack
more energy and are faster to recharge, but are also potentially
    When the FAA announced the grounding of all six
U.S.-operated 787s on Wednesday, the agency said airlines would
have to show the batteries were safe and in compliance with its
rules. It said both battery failures released flammable
chemicals, heat damage and smoke - all of which could damage
critical systems on the plane and spark a fire in the electrical
    A Japanese safety official at Takamatsu airport told
reporters that excessive electricity may have overheated the
battery and caused liquid to spill out. Pictures released by
investigators of the battery showed a burnt-out blue metal box
with clear signs of liquid seepage.
    GS Yuasa Corp, the Japanese firm that makes
batteries for the Dreamliner, said it sent three engineers to
Takamatsu to help the investigation.
    A person at the company, who asked not to be named due to
the sensitivity of the issue, said: "Our company's battery has
been vilified for now, but it only functions as part of a whole
system. So we're trying to find out exactly where there was a
problem within the system."
    An official with Thales, the French company that
makes control systems for the battery, referred all questions 
to Boeing.
    At a news conference, the Japan Transport Safety Board
(JTSB) said the charred battery and the systems around it would
be sent to Tokyo for more checks. It said there were
similarities with an earlier battery fire on a Japan Airlines Co
 787 parked at Boston's Logan International Airport.
    "This information will go to Boeing and the FAA. They will
assess it" before allowing the 787 to fly again in Japan, said
Hideyo Kosugi, a JTSB inspector. He said the JTSB aimed to issue
a report within a week but the U.S. review might take longer.
    LaHood, the U.S. transportation secretary, said Friday he
could not predict when the 787 would resume flight.
    "So those planes aren't flying now until we really have a
chance to examine the batteries ... That seems to be where the
problem is," said LaHood, who told a news conference on Jan. 11
he would not hesitate to fly on the plane himself. 
    When pressed by reporters on Friday about whether he
regretted his prior statements, LaHood said, "Last week it was
safe." What has changed since then, he said, is the fact that
another incident occurred involving the batteries. 
    Karen Walker, editor of Air Transport World magazine, said
La Hood and FAA Administrator Michael Huerta chose to "stand
side by side" with Boeing executives and underscore the plane's
safety because of its huge importance to the U.S. economy as the
 first all-new American airliner in two decades.
    "However, the joint statements of safety confidence and lack
of an (airworthiness directive) until after a second serious
incident ... could potentially hurt Huerta and LaHood," she
    Boeing shares fell 0.3 percent to $75.04. Since the recent
spate of issues began in early December, the stock is up 1.4
percent, against a gain of 5.4 percent for the S&P 500 over the
same period.
    Shares in the Kyoto-based battery maker GS Yuasa rose as
much as 3.9 percent on Friday, having dropped around 18 percent
since the Jan. 7 battery fire in the auxiliary power unit (APU)
of the JAL plane at Boston. 
    The U.S. investigation into that incident is focused on the
Japanese-made batteries, with no indication the APU - built by
United Technologies Corp's Pratt & Whitney - was
involved, said a person familiar with the government probe, who
was not authorized to speak publicly.
    Mark Rosenker, a former NTSB chairman, said Boeing conducted
over 1.3 million hours of testing before deciding the
lithium-ion batteries were safe to use on the 787, and the
company had to satisfy additional rigorous tests to be granted a
"special condition" by the FAA to use the batteries.
    "I don't believe there was corner cutting in any way. I
believe the FAA has done a good job in its certification
process. And Boeing is a very formidable and extremely careful
airplane manufacturer. You don't survive in this business by not
making safe, efficient and reliable planes," he said.
    Japan is the biggest market so far for the 787, with ANA and
JAL operating 24 of the 290-seat wide-bodied planes, which have
a list price of $207 million. Boeing has orders for close to 850
of the planes.
    Goldman Sachs estimated the hit to ANA's annual operating
profit could be up to $40 million if the grounding of its 17
Dreamliners drags on through March. The plane makes up close to
a tenth of ANA's fleet and is crucial to its growth strategy.
    ANA cancelled more than 60 domestic and international
flights through Monday, affecting more than 10,000 passengers.
JAL has cancelled 8 Dreamliner flights on its Tokyo-San Diego
route until Jan. 25. Other flights will switch to older planes.
    A spokesman for the airline said ANA remained committed to
the Dreamliner and would spare no effort to get it back in the
air safely.
    Australia's Qantas Airways said it cancelled an
order for one of 15 Dreamliners earmarked for its budget arm
Jetstar. It said the decision to cancel was taken late last
year, before the plane's recent problems. Qantas has options to
order 50 of the new generation aircraft. 
    Separately, Japan's transport ministry said a fuel leak on
another JAL-operated 787 last week was due to a malfunction in a
drive mechanism that controls a valve. It said the British
company that makes the valve was investigating. The ministry
declined to name the firm. 
    The use of new battery technology is among the cost-saving
features of the 787, which Boeing says burns 20 percent less
fuel than rival jetliners using older technology.
    Hans Weber, president of TECOP International Ltd, a San
Diego-based aviation consulting firm and former FAA adviser,
said the incidents could be linked to a bad batch of batteries.
    "We have to consider the suppliers were at one time
producing a lot of equipment for the 787 and then everything got
delayed, so some of the stuff they built has been sitting on the
shelf for a while. Some of these might have been produced early
in the production process and there may have been some
deficiencies in the production process," he said.
    The 787, a leap in aircraft design, has been plagued by cost
overruns and years of delays, though orders last year helped
Boeing overtake rival Airbus as the world's largest
manufacturer of passenger jets.
    ($1 = 89.4100 Japanese yen)

 (Additional reporting by Yoshiyuki Osada, James Topham, Mari
Saito, Issei Kato, Maggie Lu Yueyang, Herng Shinn Cheng,
Ruairidh Villar, William Rigby, Alina Selyukh and Andrea
Shalal-Esa; Writing by Ian Geoghegan; Editing by Jeremy
Laurence, Gary Hill, Kenneth Barry and David Gregorio)
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