Boeing sees 787 deliveries, battery fixes in weeks

2013-04-25 09:51

New York - Boeing expects to resume deliveries of the grounded 787 by early May and to complete its battery fix for the high-tech plane by mid-month, company chief Jim McNerney said Wednesday.

In an upbeat conference call after reporting robust first-quarter earnings, McNerney said that the company began installing its redesigned battery system "immediately" after receiving Federal Aviation Administration approval.

The FAA Friday approved Boeing's solution to the problematic lithium-ion batteries, which include replacing them and their chargers with modified components and installing a steel enclosure system to contain any overheating.

The decision cleared a key hurdle for the 787 to return to service after three months of being grounded worldwide following two incidents of battery overheating.

So far, Boeing has begun installations on 10 aircraft owned by airlines and nine planes being readied for delivery, said McNerney, Boeing chairman, president and chief executive.

"We expect to complete the bulk of fleet retrofits by mid-May... and deliveries are expected to resume in early May," he said.

The FAA will have to approve the installations on US airlines before allowing the plane to fly again. United Airlines has six 787s, the sole US carrier owning the Dreamliner.

Boeing had to come up with a fix after two battery incidents led to the global grounding of all 50 787s in service in mid-January.

On January 7 a fire erupted in the battery area of a Japan Air Lines 787 parked at a Boston airport.

Then on January 16 battery fumes forced an emergency landing of an All Nippon Airways 787 in Japan, prompting the global grounding and international investigations into the cause of the problem.

McNerney said that despite the three-month delivery suspension, the company still expects to meet its target of more than 60 787 deliveries during 2013. Only one has been delivered so far, to Air India in January before the grounding.

Boeing also confirmed its plan to ramp up 787 production to 10 per month by year-end, double the current pace.

Net income soared to $1.1 billion in the first quarter, up 20 percent from the year-earlier period, while revenues declined 3 percent to $18.9 billion, the aerospace and defense giant reported early Wednesday.

Higher deliveries of the 777 and 737 models offset the freeze on 787 deliveries, it said.

Core earnings, which exclude pension and post-retirement expenses, were $1.73 per share, well above analyst expectations of $1.48 per share.

On the New York Stock Exchange, Dow member Boeing rose 3.1 percent to $90.93, closing near the top end of its 52-week range.

The company did not reveal how much the 787 battery episode will cost it.

McNerney declined to provide details about any compensation claims from airline customers because of the groundings.

Chief financial officer Greg Smith said the costs of determining the cause of the 787 problems and implementing the fix were "minor" but declined to provide a specific estimate.

Smith underscored that Boeing would work with customers. "There's a variety of ways to insure the disruption doesn't hurt their results and operations."

The CFO estimated the 787 program would break even, on a per unit basis, "about two years from now."

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