All Nippon Airways mechanics work beside the company's Boeing 787 Dreamliner plane at Haneda airport in Tokyo

Boeing won't axe Dreamliner battery

Boeing said it would continue to speed up production of its 787 as it stood by the troubled lithium-ion battery technology.

A fire and emergency landing earlier this month, both involving the batteries, prompted regulators to ground Boeing's newest and highest-profile plane, known as the Dreamliner.

All Nippon Airways said yesterday that it replaced batteries 10 times before the overheating problems surfaced earlier this month.

Boeing chief executive Jim McNerney said airlines had been replacing 787 batteries at a rate "slightly higher" than Boeing had expected.

They had all been replaced for maintenance reasons, not safety concerns, he said on a conference call.

"Nothing that we have learned has told us that we have made the wrong choice on the battery technology," McNerney said.

"We feel good about the battery technology and its fit for the airplane.

"We have just got to get to the root cause of these incidents and we will take a look at the data as it evolves, but there is nothing that we have learned that causes us to question it at this stage."

Boeing has replaced more than 100 787 batteries for customers and its own use, according to a person familiar with the matter, who noted that 787 production started six years ago.

McNerney said replacement was "a matter of routine maintenance rather than any safety concerns" and not something airlines would ordinarily report to regulators.

He said the replacement rate had been "slightly higher" than expected, but added "there's been no incidents that we're aware of where a battery has been replaced for any sort of safety concerns."

He declined to give any cost estimates for the 787 problems or discuss the investigation in any detail.

The National Transportation Safety Board, which is leading the investigation in the United States has not yet established a cause for either of the two battery incidents.

Boeing said about 2,000 batteries of all types were replaced every year on its various planes.

US aviation chiefs have asked Boeing for a full operating history of the batteries on the 787s.

McNerney said "good progress" was being made in finding the cause of the problems, but could not say when the plane would get back in the air.

The 787 lists for more than $200 million (£127.3m) each, although discounts are common.

Boeing has said it gets around 60 per cent of the purchase price at the time of delivery, therefore deliveries are important to the plane-maker's cash flow, even though the planes themselves are money-losers for now because they still cost more to build than their eventual sale price.

Boeing projects that it will eventually break even on the 787.

From the outside, the 787 looks more or less like other planes at the airport, but its guts are completely different.

The body is mostly carbon fibre rather than aluminium and electricity powers functions on the 787 that would be fed by moving air on other planes - new technology that took years to develop.

Boeing has not said how much it cost, but Barclays Capital analyst Carter Copeland estimated that it spent about $30-40 billion developing the 787 when the whole company is worth about 56 billion dollars.

The 787 is "massively important" to Boeing, Mr Copeland says.

Boeing is still building 787s even though it has halted deliveries to customers.

It is on track to ramp up production from five a month now to 10 a month by the end of the year, McNerney said, and still aims to deliver at least 60 of the planes in this year.

This is fewer than the 80 jets or more that some analysts expected, but a figure that implies a four-month delay in delivery, since Boeing is making five 787s a month.

McNerney said Boeing still plans to increase 787 production to seven a month by mid-year and 10 a month by year-end.

The new production forecast raised some eyebrows. Russell Solomon at Moody's Investors Service was forecasting 100 787 deliveries and said Boeing's forecast of more than 60 was "significantly weaker than we had expected."

McNerney declined to discuss the possibility that regulators will require a complex fix that delays the production speed-up.

All big planes - and especially the 787 - are assembled from parts from suppliers all over the world, first into large sections at various centres in the US, and finally by Boeing into a finished plane.

Speeding up or slowing down that process is complicated and takes months or years of advance warning to suppliers.

Asked what the 787 suppliers were being told, Mr 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."

Investigators are still trying to find out what caused the two battery incidents that grounded the 787.

But McNerney said the company had learned nothing that made him think it made a mistake in picking lithium-ion batteries.

The 787 was the first plane to use the batteries so extensively.

Boeing liked them because they charge quickly and hold more power than other batteries of the same weight.

The company declined to say how many of the batteries had been replaced.

But Japan's All Nippon Airways said it had replaced batteries around 10 times because they did not keep a charge properly or connections with electrical systems failed.

Japan Airlines also said it had replaced some 787 batteries.

Among US airlines, only United flies 787s.

United Continental Holdings spokeswoman Christen David declined to say whether it has replaced batteries on any of its six planes.

Lot Polish Airlines said it had not had problems with the batteries, but one of its two 787s remains stranded in Chicago because of the grounding order.

The Federal Aviation Administration said yesterday that it had not been notified of ANA's battery replacements either by the airline or by Boeing.

The FAA requirements are detailed and spell out a number of exceptions.

In general they require a report only for malfunctions or defects that cause a serious problem such as a fire or an engine failure.

The NTSB said it received information about the replaced batteries early in its investigation.

In contrast, the probe into the cause of two burnt batteries this month involves hundreds of experts from Boeing and outside the company.

But that effort is "highly compartmentalised" and "it's not drawing any critical resources from any other growth programs we've got," McNerney said.

"Our plan is to continue production of the 787 and to continue the development of the wide-body airplanes."

Boeing said it expected to deliver 635 to 645 commercial jets this year, up from 601 last year.

The 46 787s that Boeing shipped to customers in 2012 helped it deliver more planes than European rival Airbus for the first time since 2003.

Airbus expects to deliver more than 600 planes this year.

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