Dreamliner episode much ado about little

The whole episode of the grounding of the Dreamliner 787 looks like it might have been just a storm in a teacup, and the airlines might be more concerned that the safety authorities overreacted.

Qatar Airways' five 787 Dreamliners have been grounded for more than three months following problems with the lithium battery pack. Steve Parsons / PA

Qatar Airways plans to restart flying its Boeing 787 Dreamliners on May 15, with Flight QR 075 from Doha to London Heathrow.

The airlines' five 787s have, like all 50 delivered so far, been grounded for more than three months following problems with the aircraft's lithium battery pack that led the US federal aviation administration (FAA) to withdraw its certificate of airworthiness on January 16.

Deliveries of the 787 ceased, and schedules of airlines at the front of the queue to receive the new aircraft were thrown into disarray. Qatar, the only Gulf carrier with 787s in its fleet, was forced to use a mix of Boeing 777s and Airbus A340s and A330s to carry Gulf travellers on its Heathrow service. The airline, which has 30 Dreamliners on firm order and options for 30 more, had to shelve plans to fly it on some other high-traffic routes.

Then, last week, the FAA finally approved Boeing's design fix for the suspect battery system. On Saturday, Ethiopian Airlines became the world's first carrier to resume flying the Dreamliner, carrying passengers to neighbouring Kenya, and the following day All Nippon Airways (ANA), the Japanese launch customer for the 787, flew its first Dreamliner.

Boeing devoted more than 200,000 man hours working on a solution to win that FAA approval and deployed 10 teams of Boeing mechanics to customers' engineering centres to immediately begin installing the new battery kits. The plane maker already has 890 orders for this revolutionary new aircraft, designed to be the world's most fuel-efficient airliner, up to 20 per cent cheaper to fly, and the world's first major airliner to be constructed using mainly composite materials. The emphasis now is on getting production rolling again, and start selling again, too.

The whole episode looks like it might have been just a storm in a teacup, and the airlines might be more concerned that the safety authorities overreacted.

As a result of their investigations, Boeing and the FAA have concluded that the two battery incidents posed no risk of a catastrophic failure to the 787.

The ANA 787, whose crew executed an emergency landing after the battery overheated, was in no danger, according to the FAA air transport certification manager, Ali Bahrami, and the Boeing vice president and 787 chief project engineer, Michael Sinnett. Both told a fact-finding hearing by the National Transportation Safety Board last week that the flight was never at risk of greater damage following the battery malfunction. No flames or smoke were reported and thermal damage was limited to the immediate area around the battery box.

The FAA and Boeing also downplayed the incident involving a parked Japan Airlines 787 in Boston. It was the only incident in which flames were detected, but the flames did not cause any damage to surrounding systems or the aircraft's structure. They were not the result of an exploding battery, but were generated by a short-circuit that formed in wires attached to the overheating battery box.

Both agencies were, however, concerned that two such incidents occurred within 50,000 flight hours of the 787 fleet, when the FAA special conditions to certify the aircraft's lithium-ion batteries required no more than one incident in 10 million flight hours.

Also, reputation-wise, far from breaking Boeing, all the signs are the market is right behind the US plane maker, and the airlines also seem content. Last week, Boeing posted quarterly earnings. Its earnings per share price hit US$1.73, a 24 per cent jump from the $1.40 for the same quarter last year. Although revenue had decreased to $18.89 billion, from $19.38bn a year ago, that was down to fewer deliveries of the 787 Dreamliner.

"Our first priority in the days ahead is to fully restore our customers' 787 fleets to service and resume production deliveries," said an upbeat Jim McNerney, Boeing's chairman and chief executive.

"We have worked around the clock to resolve the 787 battery issue. Our outlook for the year is positive, and our financial and delivery guidance is reaffirmed as we remain focused on the profitable ramp-up in commercial airplane production rates, disciplined execution of our development programme."

After the earnings announcement, Boeing's shares jumped by a further 3 per cent, and the International Airlines Group went even further in expressing its confidence by confirming options for 18 Dreamliners for one of its airlines, British Airways, in a deal worth $4bn at list prices, and promising to consider further orders for its other carrier, Iberia.

Etihad Airways, which has ordered 41 Dreamliners to be delivered between next year and 2019, also expressed confidence in the aircraft, describing it as "a world-class product".

Deliveries of the 787 should resume early next month.Boeing increased production of the 787 during the grounding to seven per month. It is now aiming for 10 per month by the end of the year, and says it could grow beyond that.

Boeing appears to have survived the battery episode apparently without losing a single 787 order or customer. So far only Qatar Airways has hinted at legal action but made no further move, and although not contractually obliged to compensate airlines for schedule disruptions and delivery delays caused by the groundings, Mr McNerney says Boeing will use a "variety of ways" to keep the airlines sweet.

However, not all is sweet for the project, according to the UBS analyst David Strauss, who has been following the 787. He is predicting the grounding could cost Boeing an estimated $6bn this year, and that is on top of Boeing already losing money on every plane it sells.

In a research note last month, he predicted that the Dreamliner programme will cost Boeing a further $4bn to $5bn a year through next year, and that the manufacturer will not turn a profit on the aircraft until 2021. Mr Strauss estimated the 787, which has a list price of $207 million, cost Boeing $232m each to make.

The Dreamliner has been costing Boeing money since the first planes were delivered in 2011, according to the Seattle Times. Boeing's hometown newspaper estimated the company had spent $32bn on the Dreamliner. "Profitability for the plane won't come before well into the 2020s, if ever," the paper said.