Boeing sticking with 787 battery, CEO says

The Boeing Co. is sticking with plans to speed production of the 787 and sees no reason to change the lithium-ion battery design at the center of the troubled plane’s problems, its CEO said Wednesday.

Boeing’s full-speed-ahead pledge was made even as it became clear that airlines were replacing 787 batteries more often than Boeing had expected. A fire and emergency landing earlier this month, both involving the batteries, prompted regulators to ground Boeing’s newest and highest-profile plane.

“It could range from absolutely nothing to a big problem,” Richard Tortoriello, a Standard &Poor’s analyst, said in an interview. “When you’re in a waiting game like this, where you don’t know what the risks are, it’s best not to be a cowboy.”

Investigators are still trying to determine what caused the two battery incidents that grounded the 787. But CEO Jim McNerney said the Chicago-based company has learned nothing that makes him think they made a mistake in picking lithium-ion batteries. Boeing liked them because they charge quickly and hold more power than other batteries of the same weight.

Airlines have been replacing 787 batteries at a rate that’s “slightly higher” than Boeing had expected, McNerney said during a conference call to announce 2012 results. None of the replacements has been for safety concerns, he said, and replacing batteries in planes is not uncommon. U.S. aviation officials said they have asked Boeing for a full operating history of the batteries on the 787s.

The company declined to say how many of the batteries have been replaced. But Japan’s All Nippon Airways said it had replaced batteries some 10 times because they didn’t keep a charge properly or connections with electrical systems failed. Japan Airlines also said it had replaced some 787 batteries.

Boeing is still building 787s, even though it has halted deliveries to customers. It still aims to deliver at least 60 of the planes in 2013, and it’s on track to speed production from five per month now to 10 per month by year end, McNerney said.

Asked what the 787 suppliers are being told, McNerney said, “No instructions to slow down, business as usual, and let’s keep building airplanes and then let’s ramp up as we’d planned.”

About 15 percent of Boeing’s 787 deliveries this year will be Dreamliners that were built early and need extensive work to bring the airplanes up to delivery quality. Greg Smith, Boeing’s chief financial officer, expects Boeing to wrap up work on all of those initially built 787s by 2015.

Even as Boeing focuses on getting the 787-8 back in the air, the company continues work on two new versions of the Dreamliner. Boeing still expects to assemble the first 787-9 this year, with the first 787-9 being delivered to a customer in early 2014.

And the jet maker is edging closer to formally launching its stretched 787-10 later this year.

“The case for the 787-10 has strengthened … based on talks with customers,” McNerney said.

McNerney said the 787 investigation is not detracting from development programs, including the 787-10 and an updated 777. However, Boeing “has more work to do” on the updated version of the 777, McNerney said.

Boeing officials said Wednesday they do not anticipate a significant financial impact from the 787’s battery woes. Boeing shares rose 94 cents Wednesday to close at $74.59.

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