Boeing stock tumbles after fire on 787 Dreamliner
Friday, July 12, 2013
LONDON (AP) — A fire aboard an empty 787 at Heathrow Airport spooked Boeing investors Friday, as they feared the re-emergence of battery problems that grounded the plane for months earlier this year.
At one point, a rapid sell-off had knocked $6 billion off Boeing’s market value. The stock recovered slightly as speculation about the cause of the fire shifted away from the batteries. Shares closed down $5.01, or 4.7 percent, to $101.87.
The cause of the fire on the Ethiopian Airlines plane — which broke out more than 8 hours after it had landed — remained under investigation. Meanwhile, an unspecified mechanical issue caused another 787 flown by Thomson Airways to return to Manchester Airport, adding to concerns about the plane.
Runways at Heathrow were shut down for nearly an hour as emergency crews put out the fire. No passengers were on the plane.
The 787, which Boeing dubs the Dreamliner, was grounded in January following two incidents with its lithium-ion batteries. One 787 caught fire shortly after it landed at Boston’s Logan International Airport on Jan. 7.
Boeing marketed the plane to airlines as a revolutionary jet which — thanks to its lightweight design — burns 20 percent less fuel to comparable aircraft. Boeing, based in Chicago, has delivered 66 of the planes to customers with another 864 of them on order.
Boeing’s stock partially rebounded after photos were circulated showing the section of the plane damaged by the fire — an area far away from the battery compartment.
The photos show the rear roof of the plane burned, near the jet’s vertical stabilizer, often called the tail. That part of the plane houses a set of bunk beds where some of the flight attendants can sleep on very long flights.
The batteries are located in two separate compartments under the floor of the plane. One is near the wings; the other under the cockpit. Friday’s fire wasn’t near either of those areas.
“Evidence thus far suggests that the battery was not the cause of the fire at Heathrow,” Jason Gursky, an aerospace analyst with Citi told investors. “The images out of London are not consistent with the fire at Boston Logan, which prompted the grounding earlier this year.”
He added that “aircraft are complex animals such that a fire could come from many places.” He added that this incident could highlight a new problem with the 787, causing further problems for Boeing.
The unanswered questions kept the company’s stock sharply lower throughout the afternoon. Friday’s loss ultimately shaved $3.8 billion from Boeing’s market capitalization.
Boeing spokesman Marc Birtel said in an email that the company had personnel on the ground at Heathrow and that the company “is working to fully understand and address” the situation.
The U.S. National Transportation Safety Board and the Federal Aviation Administration said Friday that they were sending representatives to London to assist British authorities with their investigation of the fire.
There were also few details about the severity of the Thomson Airways incident. The jet had taken off from Manchester, England headed to an airport in Sanford, Fla., near Orlando. The airline said it had returned to Manchester “as a precautionary measure.” All 291 passengers disembarked safely and engineers inspected the aircraft, the airline said.
Airplanes routinely return to the airport for minor technical problems. United Airlines recently had several minor problems with oil leaks on the 787, forcing emergency landings. The maintenance issues, which often also happen on other jets, received extra scrutiny because of the 787’s problems.
Ethiopian Airlines was the first airline to resume using the 787, with a flight on April 27 from Ethiopia’s capital of Addis Ababa to Nairobi, Kenya, after the battery incidents.
The registration number of the plane at Heathrow —ET-AOP — is the same as the aircraft used in the April 27 flight. Randy Tinseth, vice president of marketing for Boeing’s commercial unit, was on that initial flight and said at the time that the flight “left on time, landed early and was truly perfect.”
The 787 is one of the most unique commercial aircraft in the skies today.
Half of its structure is made of plastics reinforced with carbon fiber, a composite material that is both lighter and stronger than aluminum. In another first, the plane relies on rechargeable lithium-ion batteries to start its auxiliary power unit, which provides power on the ground or if the main engines quit.
Problems with those batteries ultimately led to the grounding in January of the 50 Dreamliners flying at the time.
First, a battery ignited on a Japan Airlines 787 shortly after it landed at Boston’s Logan International Airport on Jan. 7. Passengers had already left the plane, but it took firefighters 40 minutes to put out the blaze.
Problems also popped up on other planes. There were fuel and oil leaks, a cracked cockpit window and a computer glitch that erroneously indicated a brake problem.
Then a 787 flown by Japan’s All Nippon Airways made an emergency landing after pilots were alerted to battery problems and detected a burning smell. Both Japanese airlines grounded their Dreamliner fleets. The FAA, which just days earlier insisted that the plane was safe, did the same with U.S. planes on January 16.
It was the first time the Federal Aviation Administration had grounded a whole fleet of planes since 1979, when it ordered the DC-10 out of the sky following a series of fatal crashes.
The FAA eventually approved a plan by Boeing to better insulate the battery’s eight cells and the addition of a new containment and venting system. Once the changes were made, planes started to fly again.
Friday’s fire led many to initially question if that solution was not enough.
“For Boeing’s sake, I hope it’s not the batteries,” said Mary Schiavo, former inspector general of the U.S. Department of Transpiration. “There was a lot of criticism that the FAA didn’t fully understand the battery issues when they certified the batteries. People got over that, and they kind of thought that was behind them.”
If this is a battery-caused fire, “It puts the FAA in a very bad spot.”
Associated Press writers Raphael Satter, Sylvia Hui and James Brooks in London, David Koenig in Dallas and Joan Lowy in Washington contributed to this report.
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