Boeing CEO: ‘Business as usual’ for 787 despite battery issues
Boeing Co. is pushing ahead to hit its 787 production goals in South Carolina and Washington as a lingering safety probe that grounded the jetliner indefinitely enters its third week.
CEO Jim McNerney, in his first detailed remarks about the investigation into batteries on the new airplane, said Wednesday that the company is working “around the clock” with regulators and experts to find and fix the “root cause” of the problem.
“When we know the answer, we’ll know the answer, and we’ll act on it,” McNerney said during a conference call with financial analysts and journalists.
He would not speculate about the possible causes of the battery malfunctions or when investigators will zero in on the exact problem.
“We have no idea, yet, even though we’re making good progress, and we’re narrowing down the things that could have gone wrong,” he said.
Also unknown is when the Dreamliner will be cleared to fly again.
“In 2013 our first order of business, obviously, is getting the 787 back into service,” McNerney said.
The Federal Aviation Administration on Jan. 16 grounded all U.S.-registered 787s after two incidents this month, including a fire on a 787 that was parked in Boston. That move triggered a halt in operations of all 50 Dreamliners that were in service worldwide.
In the meantime, Boeing workers continue to assemble the jet at factories in North Charleston and Everett, Wash., near Seattle. Suppliers also have been told to keep making parts for the grounded plane, McNerney said.
“No instructions to slow down, business as usual,” he said. “Let’s keep building airplanes. And then let’s ramp up as we planned.”
The 787 has a high profile in the aviation industry because it’s made mostly from lightweight composite plastics rather than aluminum, a point Boeing has touted to airlines looking to cut their fuel bills.
Boeing has racked up more than 800 orders for the jet, and it plans to make and deliver at least 60 of the airplanes this year.
McNerney said Boeing remains “on track” to double its monthly production rate to 10 by the end of 2013, with three a month rolling out of the factory at Charleston International Airport.
“I have a lot of confidence that they’ll hit their targets,” McNerney said, referring to the 6,000 employees at the local manufacturing campus.
McNerney acknowledged Wednesday that airlines were swapping out batteries on the 787 at a “slightly higher” rate than Boeing had expected, while stressing that none was replaced for safety reasons. He also noted that changing batteries on airplanes “is a matter of routine maintenance.”
McNerney said the company is sticking by its decision to be the first aircraft manufacturer to use lithium-ion batteries, which are light and powerful but are volatile and can overheat.
“Nothing that we have learned has told us that we have made the wrong choice on the battery technology. We feel good about the battery technology and its fit for the airplane,” he said. “We have just got to get to the root cause of these incidents and we will take a look at the data as it evolves, but there is nothing that we have learned that causes us to question it at this stage.”
While analysts have raised concerns about the cost of grounding and fixing the 125 existing Dreamliners, Boeing finance chief Greg Smith said he expects no significant financial impact from the 787 battery issues this year.
Howard Rubel of Jefferies & Co. Inc. agreed. The Boeing analyst told CNBC that the company can absorb this latest delay for the Dreamliner, which ran more than three years behind schedule.
“They can continue to build planes at the current rate without stretching their resources,” Rubel told the cable network before McNerney spoke Wednesday.
The Boeing CEO was asked at the end of his call how management is addressing the battery issue with its 787 work force in South Carolina.
“We’re telling them, number one, you’re doing a helluva job and, number two, to keep charging. And you’re a part of what is going to be the most successful wide-body that our company has ever made. That’s what we tell them,” he said.Reach John P. McDermott at 937-5572.