Boeing Gets Formal FAA Approval for Lithium-Ion Battery Fix

Michael Teague  |

Boeing (BA) received official approval on Thursday from the Federal Aviation Administration to begin using the company’s refurbished lithium-ion battery system in its much anticipated 787 Dreamliner planes.

The planes had been banned from flying for the past three months, after two separate and high-profile incidents in January during which the new batteries overheated and filled airplane cabins with smoke.

The announcement comes as Boeing, the nation’s second-largest aerospace and defense company, still does not know exactly what caused the original battery-malfunctions that lead to the overheating incidents.  An engineer for the company said that the cause may never be known, as the fire that resulting from the overhearing may have destroyed all evidence of what specifically went wrong.

In any event, the company claims that the system has been redesigned to preclude any similar mishap.

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Meanwhile, during the conference call on Wednesday during which the company discussed its first quarter earnings, Boeing downplayed the costs of the battery-fix.  While not providing an exact figure for how much the fiasco cost the company, it claimed that most of it had been accounted for during the first quarter.

With 25 Dreamliners still waiting to be fixed before delivery, the company plans to finish the repairs to the 50 jets that have already been delivered by midway through May.  To this must be added the cost of the 200,000 hours its engineers spent in their attempt to locate and repair the malfunction.

Boeing said that the extra expenses would be accounted for by spending cuts, as well as an increase in the cost of production of more than 1,100 Dreamliners.

For Q1, the company reported a rise in earnings but a decrease in revenue compared to the prior-year period: Boeing made $1.1 billion, or $1.73 per share on revenue of $18.9 billion, compared to the year before when it made $923 million, or $1.22 per share on $19.3 billion of revenue.  Earnings were also well ahead of expectations of $1.49 per share.

The company also announced that it would spend another $1.5 to $2 billion during the second quarter to continue its stock repurchasing program.

For the time being, the company seems to have absorbed what could have been a much worse disaster.  Shares were trading for as much as $92.60, before pulling back slightly to $92.00, a gain of 1.3 percent.

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