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UPDATE 1-Norwegian says taking Dreamliner out of long-haul service, demanding repairs (not 'to return Dreamliner to Boeing')

(Corrects to say Norwegian taking Dreamliner out of long-haul service, not returning Dreamliner to Boeing)

OSLO, Sept 28 (Reuters) - Budget airline Norwegian Air Shuttle is taking one of its brand new Dreamliners out of long-haul service and demanding that Boeing repair the plane after it suffered repeated breakdowns, the carrier said on Saturday.

Norwegian Air Shuttle will instead lease an Airbus A340 from HiFly to keep its long-haul business going, a spokesman said.

"The aircraft's reliability is simply not acceptable, our passengers cannot live with this kind of performance," spokesman Lasse Sandaker-Nielsen told Reuters.

"We are taking it out of long-haul service."

A Boeing spokeswoman could not immediately be reached for comment.

The Dreamliner was expected to be a game-changer for the aviation industry, but there have been delays getting it into service and setbacks including the grounding of all the planes due to battery problems.

Norwegian launched long-haul operations this year and hoped to capitalise on Dreamliner's lower operating cost as the jet's lighter-weight engines promised a 20 percent savings on fuel.

But its first two Dreamliners, part of a planned fleet of eight, broke down over half a dozen times in September, forcing it to lease back-up planes on short notice or cancel flights.

Norwegian summoned Boeing's management this week and the aircraft manufacturer promised to locate spare parts centres at all of the airline's long-haul destinations and send a team of engineers to the Nordics to monitor the planes.

The aircraft that will be returned is still stuck in Bangkok after a hydraulic pump failure this week and will be flown back to Stockholm where Boeing will carry out the work. (Reporting by Balazs Koranyi; Editing by Hugh Lawson)