The commercial aerospace behemoth The Boeing Company (BA) finally received the green light from the U.S. Federal Aviation Administration (FAA) for the 787 Dreamliner’s redesigned battery. This marks an important step toward getting the grounded jetliner back in the skies.
Following a broad review of certification tests, Boeing’s new improved 787 battery system was approved by the FAA. The approval enables Boeing to install lithium ion batteries on 787 jets that include added protection around the cells to control overheating, a steel case to prevent any fire from diffusion as well as a tube that vents fumes outside the aircraft.
The company has already initiated the modification work and FAA will likely issue a directive soon, lifting the three-month ban once the fixing is complete. Boeing’s teams around the world are prepared to install the new lithium-ion battery systems and the operation will take around five days once it starts. The FAA’s approval is only applicable to U.S. airlines. However, other international regulators also follow the agency’s direction.
All Nippon Airways (“ANA”) − Boeing’s largest 787 customer − has started installing the batteries into 5 of its 17 Dreamliner planes and intends to carry 100 to 200 test flights in May with this latest battery system before taking passengers again. After ANA, the biggest 787 operator, Japan Airlines Co., also began replacement procedures. Japan Airlines and ANA, the two big airlines in Japan, still need approval from Japanese regulators before the re-commencement of their flights.
The only U.S. operator of the 787, United Continental Holdings Inc. (UAL), plans to continue service between Houston and Denver by May 31, and commence Dreamliner service between Denver and Tokyo by Jun 10.
Two battery overheating incidents in Jan 2013 compelled all 50 Boeing 787 airplanes to be grounded. The 787 Dreamliner is the first passenger jetliner manufactured mostly of lightweight and environmentally friendly composite material.
The grounding of the 787 Dreamliner has cost Boeing an estimated $600 million. Despite the interruption in deliveries that started in January, Boeing aims to finish all planned 2013 deliveries by the end of the year. Further, the company expects no adverse impact on its assumptions for the year from the 787 battery issue.
Boeing currently retains a Zacks Rank #3 (Hold). Other stocks in the sector are Wesco Aircraft Holdings, Inc. (WAIR) and Triumph Group, Inc. (TGI), both with a Zacks Rank #2 (Buy).
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